decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
Day 10 of the SCO v. Novell Trial, Friday, March 19, 2010: Stone, O'Gara, Nagle - as text
Sunday, October 17 2010 @ 07:44 PM EDT

Novell has been given more time to file its brief in opposition to SCO's appeal of SCO's recent loss in the SCO v. Novell trial. The new deadline is October 29th. Novell's appellate attorney is busy working on other cases.

So let's use the time to continue chronicling the events at the trial that ended so badly for SCO in US District Court in Utah, presided over by the Hon. Ted Stewart. We are up to the text of the trial transcript for Friday March 19, 2010, the 10th day of trial, so it's the end of the second week of this jury trial. The day's witnesses, called by SCO, are Chris Stone, formerly VP at Novell, Maureen O'Gara by video deposition snips, and Andrew Nagle. Here is Groklaw's eyewitness report from the trial for that day, if you'd like to review.

I'm guessing that, looking back, SCO wishes they'd put O'Gara on before Stone, instead of the reverse. By the time she appears, her reputation has preceded her in Stone's derogatory picture of her in his testimony. Stone comes across as a manly guy, clear, decisive and forthright. More importantly, he comes across as honest, freely admitting things that a less honest guy would not. But that's a real plus in a witness at a jury trial, because jurors can tell when someone is straightforwardly telling what he or she knows or not. He makes O'Gara sound ditsy silly at best and maybe not so truthful at worst, and either way if the jury had to choose who to believe, I think they'd choose Stone.

First though, here's the docket info on the new deadline in the appeal:

10/01/2010 - Open Document - [9802990] Motion filed by Appellee Novell, Inc. to extend time to file appellee/respondent's brief until 10/29/2010. Served on: 10/01/2010. Manner of service: ECF/NDA, email.

10/01/2010 - Open Document - [9803037] Order filed by Clerk of the Court granting appellee's unopposed motion for an extension of time to file appellee's brief to 10/29/2010 for Novell, Inc. Served on 10/01/2010.

The motion basically says that Morrison & Foerster's main appellate attorney on this matter, Deanne E. Maynard, is busy on a number of other cases. The motion was unopposed.

If you'd like to skip ahead to the transcript, feel free. Similarly, if you would like to check out any other day of the trial, here you go:

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

One of the things Stone testifies to is that long after O'Gara gave the world her version of the conversation with Stone in 2003, which was obviously hurtful to Stone at the time, Darl called Stone, after Darl was fired from SCO, trying to get Stone to invest in Darl's new venture, and Stone says Darl told him not to worry about "that O'Gara business".

Not the world's best introduction for O'Gara, so by the time O'Gara begins her testimony, the jury was primed. With hindsight, it probably would have been better to put her on first, let the jury hear her story, and then have Stone tell his side after the jury already had formed an impression.

Maybe it wouldn't make any difference, given the performance, and probably SCO thought they could make mincemeat of Stone, undermine his credibility, and then O'Gara would give his story the coup de grāce. But in reality, Stone handled himself so well, any normal person would accept his narrative as believable, so Singer just came across as badgering a decent man, while O'Gara came across as peculiar. That's my impression, but read it for yourself.

Before the Jury Enters:

The day begins with the usual discussions between the two sides' lawyers and the judge regarding disputes as to what can and cannot be presented to the jury that day.

First up is the O'Gara deposition, and specifically whether an authenticating document, the email from her to SCO's Blake Stowell jokingly asking for combat pay, can or cannot be presented. Novell wants to show the email, but SCO objects that it's prejudicial, that Novell's point will have been made in other ways, and that it's of "marginal probative value", so the judge asks Novell what it sees as its probative value:

THE COURT: What is the probative value of this e-mail?

MR. JACOBS: This e-mail is an e-mail in which Ms. O'Gara says to the public relations guy at SCO, I want more pay because she has received an angry e-mail from a reader. It's part of our case that Ms. O'Gara and SCO had an unwholesome relationship in the way they interacted with each other and that therefore Mr. O'Gara was biased.

THE COURT: Mr. Jacobs, I remember from the deposition testimony that was disputed and therefore I had the opportunity to read, regarding Ms. O'Gara. I think the Court allowed sufficient amount of deposition testimony to come in to really make that point. I see nothing to be gained by reinforcing it with this e-mail.

An unwholesome relationship. That's saying it true. The judge thinks there is enough evidence of that already -- remember the "I need you to send a jab PJ's way" -- that Novell doesn't need to add on more. But now SCO doesn't want the jab PJ email to be shown, even though that part of the deposition will be shown, with references to Groklaw redacted out, and the judge sides with SCO on this also, ruling the email can't be shown:
MR. NORMAND: Our concern with this, Your Honor, is two or threefold. One, the deposition testimony will have already made the point that Novell wants to make, which is that Mr. Stowell asked O'Gara to send a jab to PJ. The testimony, as Your Honor will recall from the discussion last week, will already have mentioned Groklaw. We fought and lost on that front. The letter has multiple redactions to Groklaw.

THE COURT: They are out.

MR. NORMAND: They are redacted. It's going to be self-evident to the jurors what the letter is referring to. Although we appreciate Your Honor's instruction to the jury and we hope they will follow the instructions, we're getting to the point of really pushing the linex on both the marginal relevance of getting to the letter and really testing the capacity of the jury's curiosity not to follow up on this.

In addition, it's a new exhibit that we hadn't seen until last night. The O'Gara depositions have been sitting around for three days and ready to go.

THE COURT: It was apparently used at the deposition, though; is that correct, Mr. Normand?

MR. NORMAND: That's correct, yes.

THE COURT: So it's not new to you?

MR. NORMAND: Oh, it's not, but we went through this exercise a week ago.

THE COURT: I see what you're saying. But it's not totally new to you. It's unlike those exhibits that they sought yesterday, which were all brand new, which the Court did not allow.

MR. NORMAND: This is not an exhibit that we've never heard about.

THE COURT: Mr. Jacobs, do you want to respond?

MR. JACOBS: No, Your Honor.

THE COURT: The Court will allow you to reference it, but do not reference it showing the e-mail.

I think this was error on the judge's part, actually, but not worth fighting about now. The reason I feel it was an error is this: I disagree with Normand that the jury would find the reference self-evident. With all the redactions, and no explanation, the danger is that they'd have no clue at all what it's talking about, and what it was talking about was seriously wrong.

Ask yourself this: why did SCO need her to send a jab my way? Let's go back in time, shall we? Darl McBride, in a teleconference that was widely reported on as being weird, attacked Groklaw and me as a person, smearing my reputation, but in a vague way, with a promise to provide more details in the future on how awful I was. Here's the way it went:

McBride: We also have a major website that's out there that has stated their core reason for being is to try and destroy SCO and to try and put a big damper on what our claims are in the marketplace, so we have a lot of misinformation flying around out there on this website, and the reality is that the website is full of misinformation, including the people who are actually running it, and I think when you get to the point where you start to strip away the people that are in front of Groklaw, I think you'll find that Pamela Jones is not who she says she is, and the key to finding out who is behind Groklaw is to understand who is Pamela Jones, and we think that when you get to the point where you find out some of the things that we know, you'll find out that everyone is being misled as to who she says she is, and that the identity of Pamela Jones is much different than is advertised, so, some of those things that are happening over on that website are having a dampening effect on SCOscource, and as some of these issues become more transparent in the public marketplace, we think that will have an impact as well....

Operator: And we'll have our final comment, Robert Mims, Salt Lake Tribune.

Robert Mims: Hi, Darl, how ya doing?

McBride: I'm doing great. How are you doing, Bob?

Mims: Good. I wanted to ask you if you are able to expand any further on just who Pam Jones is?

McBride: It's an interesting question. What I would say without getting into all the details of what we do know right now is that it is not what it is reported to be, and I believe that anybody that goes over there and spends any amount of time flushing out the reality of the Pamela Jones situation will come to the understanding that we have, and the knowledge that we have, that all is not as it appears in Groklaw-land, and you know, clearly there are a lot of -- there is a lot of spinning, a lot of hype over there around virtually anything that is about SCO to the negative, unlike traditional media outlets such as yourself, that will take more of a balanced approach on things. We appreciate that we do have things that people say about us that deservedly need to be talked about that are negative, or so, this disaster we had going through the NASDAQ listing this last quarter was no fun, so we'll be glad to take our lumps, but the whole situation of having a website that is up there that is so biased and has only one thing to say, which is how do we destroy SCO? I believe that when that happens, you need to understand who is behind that, just like when you read a book you tend to go to the author as to the credibility. Well, we live on transparency here with this company, we're as transparent as you can get at this point after having just gone through this restatement process and the 10K process and the 10Q's and all of you have had a chance to see who and what we're all about. Let's turn some of that same energy toward the other side and find out who these other people are just so that we can have a fair fight.

Mims: Well, certainly she has, Pam has had a close relationship with the Open Source community, and at one point took a job but then backed off on that, but are you also saying she has some sort of connection to IBM perhaps?

McBride: I don't want to go to the IBM card. What I want to go to is, who is Pam Jones, and it's about credibility, and I believe once people learn some of the things that we've come to learn, there is going to be a serious question as to the credibility of that organization.

Mims: Well, when do you plan to release what you've learned then?

McBride: We're still digging to the bottom of this. I think once we have all of our facts complete, we'll be glad to do that. We're near the bottom of what that situation is all about, and we'll be glad to do that at a certain point in time.

Mims: Okay.

That was the last we heard of it. Probably because they found out after more digging that I am exactly who I say I am, and there is no dirt on Groklaw. I believe he said all that because he unwisely accepted as true some information from an unreliable source. Then, from all I can discover, he realized he'd goofed and was swinging from a flagpole in the breeze, with nothing to say but "Sorry. I goofed." Not wishing to say he was sorry and retract, and perhaps worried about a defamation lawsuit, and for sure worried about having nothing to release after saying he would, instead SCO asked for a jab to be sent my way.

Now, if all that is so, that is important, because it shows that not only was there an unhealthy relationship between SCO and O'Gara, as Novell put it, which made it possible for such a request to even happen, but it shows the lengths to which SCO was willing to go to shut Groklaw up or damage its credibility. It was a real smear campaign.

I think personally that this shows that they knew what Groklaw was publishing was true. My favorite quotation from Linus back in 2004 says it all:

"Groklaw does nothing but shine the light on what SCO is doing," Torvalds said. "[SCO] are like cockroaches scurrying about in a panic saying, 'we'll need the anti-light.'"
Otherwise, they'd have just shown where Groklaw was wrong on its facts or its conclusions. They were certainly repeatedly offered the floor, and they could have accepted our invitation. Instead, they chose the dirty route. That, I believe, would have informed the jury that SCO was willing to play dirty to win, and that is probative in my eyes. I considered it intimidation at the time, a prelude to worse if they ever could find me. I wish the jury did know how low those skunks were willing to go in all its gory details.

But Novell didn't wish to push it, and there are good reasons probably for that. Every decision one makes in litigation is apt to have more than one facet to it, like chess. You have choices, and a string of conceivable consequences for each move. You try to figure that all out before you move, but it's a fluid environment, with unknowns always in the picture to some extent, in that you never know for sure what your opponent will do.

After a brief discussion about lawyer witnesses and how to handle privilege objections, Stuart Singer asks to use some language from SCO's complaint and Novell's answer, because he thinks they represent admissions on Novell's part. The judge asks if Novell's Michael Jacobs has an objection, and he says he'd have to see some specifics, so they can work it out during a break.

Next Singer wants to present evidence from a recent 10K to establish punitive damages. Novell says the matter should wait, because Novell intends to present a motion that punitives should not even go to a jury. So they agree to do that, and the jury comes in and is seated.

Chris Stone Takes the Stand:

Singer immediately goes to Stone's remarks at a business conference in 2004. He plays the speech, allegedly so Stone can tell him, but really for the jury to watch, whether he really said that. "Yes," Stone says forthrightly, "I said that." But Singer persists:

Q You said those words at the open source conference?

A Yes, I did.

Q The we refers to Novell?

A That's correct.

Q The Darl refers to Darl McBride?

A That's correct.

Q The chief executive officer at the time. But when you made the statement we still own UNIX, sir, was that a true statement or a false statement at that time?

A That's a true statement.

Q So it's your position in March of 2004 that Novell still owned UNIX; is that correct?

A That Novell owned the copyrights and patents, that's correct.

Compare this testimony with Dr. Christine Botosan's, with the "I think it's important that I explain my answer to the jury" sideshow. Stone is just yup, yup, yup. I said it. It's true. So what?

Next Singer tries to catch him in his speech:

Q Well, let's first stick with my question. Did you say copyrights in that statement?

A No. I said own UNIX.

Q Is that statement, we still own UNIX, a true or false statement?

A It is true. I was referring to the copyrights, the patents.

Q So you equate ownership of the copyrights to essentially ownership of the business; is that right?

A Not the business.

Singer, of course, is trying to get him to say that SCO can't own the business without the copyrights, but of course they can, and they do. Next, we come to the conversations between Darl McBride and Stone in 2003:
Q Am I correct that in those conversations Mr. McBride never asked Novell to transfer copyrights to SCO but rather to clarify that copyrights, in fact, were owned by SCO; is that correct?

A When you said Novell, he never asked me specifically that question. He may have asked other people in Novell. I am not aware of that.

Q I'm asking about the conversations you know of from your testimony -- from your personal knowledge with Mr. McBride. Did Mr. McBride ever ask you to transfer the copyrights from Novell to SCO?

A No, he never said it as you said it.

Q Did he ask, however, that there be some clarification that the copyrights were owned by SCO?

A He asked for clarification many times on the copyrights with respect to the agreements, that's correct.

I've never understood why SCO thinks this is a winning point. To me it just says that at a bare minimum there was confusion about the ownership of the copyights, which is the same as saying Novell couldn't have slandered SCO's title, since even SCO wasn't sure it had it.

Next Singer brings him to the most important part of his testimony, from SCO's point of view, the conversation with Maureen O'Gara. He's trying to establish that Novell released its statement on May 28, 2003 that Novell owned the copyrights deliberately to hurt SCO, which that same day was having its teleconference on its earnings, but Stone says he actually wasn't aware that SCO had that planned:

Q Do you recognize this, then, to be what is considered in business to be an earnings release by SCO, a public company, that was issued on May 28th, 2003?

A Yes. It looks to be that.

Q Now do you claim that you didn't know that SCO was releasing on May 28th, 2003 its earnings?

A I had no idea.

Q You had no idea. Do you know Maureen O'Gara?

A Not personally. I know who she is.

Q But you don't know her personally?

A No.

Q Didn't have any type of business relationship with her?

A Only through the press. She was a journalist in the computer business.

Q In fact, sir, you had given her your cell phone, correct?

A A lot of people have my cell phone number, unfortunately.

Q You had given her your home phone number?

A No, I did not....

Q Did you have a conversation with Maureen O'Gara on the evening of May 27th, 2003?

A Yes, she called me.

Q She told you that she had heard that there was going to be a press release issued by Novell the next day, correct?

A That's correct.

Q That press release would assert that Novell owned the UNIX copyrights, correct?

A That's correct.

Q And in that conversation, did you tell Maureen O'Gara that that was, in fact, true, that the press release was forthcoming?

A No.

Q Didn't tell her that?

A No.

Q Did you, in fact, then not tell her that the reason you were releasing the press release the next day was because it was the day of SCO's earnings?

A Absolutely not.

Q Absolutely not. I suppose, then, you didn't tell her that you were doing this to up end SCO's stock or throw a monkey wrench into SCO, or any words of similar effect?

A No.

Q You do agree that you spoke with Maureen O'Gara on the night of May 27th about this subject?

A I prefer to say I listened to her.

Our reporters attending this day told us that here everyone in the courtroom laughed. And Singer does no better with his next point:
Q In June of 2003, are you aware that Novell sought to waive rights that SCO was seeking to exercise regarding IBM's misuse of UNIX technology?

A Yes.

Q Did IBM request Novell to do so?

A Not at all.

Q Is it your testimony that no one from IBM had any conversation with anyone from Novell prior to the exercise of that waiver?

A We acted on our own. No input from IBM at all....

Q Sir, were you aware whether or not there was a lawsuit pending between SCO and IBM as of June of 2003?

A It was very public, yes.

Q Did Novell, through the waiver in June 2003 as well as subsequent waivers, take steps to try to prevent SCO from exercising rights under its software development agreements with IBM?

A That's correct.

Q And you understood that if you did nothing, IBM could defend itself in court, were able to do so, correct?

MR. ACKER: Objection, calls for speculation as to what IBM can and cannot do.

THE COURT: I'll overrule this objection.

BY MR. SINGER:

Q Mr. Stone, can IBM defend itself in court?

A That's up to IBM. I would imagine they probably could.

Q And if IBM's position was correct, they would have a court to determine it. If SCO's position was correct, then the court could determine that as well, correct?

A I would imagine so.

Q You tried to shortcut that process by Novell going in to waive SCO's rights under these agreements against IBM; is that right?

A No, that's not right. We were not trying to shortcut any process. We were concerned about Novell and Linux and the open source movement in the industry, and this was damaging to that process.

I think you can see how believable this guy is on the stand. He admits what he said and did without equivocation, but he clearly denies the interpretation SCO tries to put on it as to motive and he denies her story utterly. Stone's confidence on the stand seems to rattle Singer a bit, because next he starts asking Stone about the LaSala letters to SCO, and even after Stone tells him that he wasn't involved in the letters, he persists, leading to this exchange:
Q I would like to show you Exhibit F-21.

A Thank you.

Q Mr. LaSala, have you subsequently seen that these copyright registrations that Novell obtained with respect to certain UNIX copyrights?

MR. ACKER: I actually think he misspoke and called Mr. Stone Mr. LaSala.

BY MR. SINGER:

Q Mr. Stone, I apologize. Mr. Stone, do you recognize that these are copyright registrations that Novell obtained in August, September, October 2003?

MR. ACKER: Calls for speculation. He gave his prior testimony.

MR. SINGER: He may have seen these later and perhaps recognized them.

THE COURT: Ask him.

THE WITNESS: I've never reviewed or read these. I appreciate the upgrade to Mr. LaSala.

If this was supposed to be SCO's big moment, it has fizzled. Singer sits down, and then he asks to reopen his direct examination and is given permission. And here's the mean thing he wants to present to the jury:
Q Mr. Stone, you subsequently left Novell in 2004; is that correct?

A That's correct.

Q Were you asked to leave?

A Yes, I was.

Q You were given a severance package?

A Yes, I was.

Q You were given a contract that had -- you had a contract that had continuing obligations to the company?

A No obligations.

Q Well, you had a noncompete agreement?

A Excuse me. Yes, I have a noncompete.

Q You have provisions regarding cooperation with the company?

A Yes, I do.

Q How much was the amount of the payment that you received at the time of your severance?

A Over a period of time, it equated to $2 million.

I don't know about the jury, but my reaction is simply to think that Novell should have kept him. He was the principal person pushing Linux at the time there, and if they had listened to him, the company would have done a lot better. The legacy stuff they insisted on continuing to push continued to be a drag, and Linux was making them money. This is the Boies Schiller style though, to make an opposing witness look as bad as possible.

Novell's Eric Acker now begins the cross examination, and he takes Stone to the speech again, putting it into a context, to show that it wasn't Novell trying to hurt SCO, but SCO actually hurting Linux and hence Novell's business:

Q Let me ask you about the speech you gave in March of 2004. Could you first tell the ladies and gentlemen of the jury what the open source business conference was, what sort of gathering that was?

A Sure. It was a gathering of business people, not technical people, in the open -- interested in open source computing. It was becoming a very popular way of writing software and developing software applications and software services. And it was the first conference of its kind to try to support the notion this was a good thing, and that it was a direction that the industry was heading in. And we had quite a good turnout. It was mainly business people.

Q What was the nature, what was the theme of your speech?

A The theme of my speech was very much to move -- to not be afraid of moving towards supporting the open source technology movement, and that older operating systems and development environments were closed and this provided a much more open and freer model of developing software applications.

Q Between May 12th of 2003 up until this conference in March of 2004, was the issue of SCO's assertion that there was UNIX in Linux and SCO's attempt to obtain licenses on that theory, was that something that was prevalent in the software community?

A It was the headlines every single day.

Q Did it impact your business or the business you were running at Novell?

A Yes, it did.

Q How so?

A It was clearly a distraction. It was affecting our ability to promote Linux in the open source movement as a development model, as a business for Novell going forward. I was very concerned that this was harming Novell's future business.

Q I'm going to show you a clip again of your speech, the tail end of your speech, and I'm going to show you the whole tail end of your speech as opposed to what the plaintiff's counsel has shown to you.

MR. ACKER: If we could do that, Mr. Lee.

(Videotape played)

BY MR. ACKER:

Q Do you still believe each of those statements to be true today?

A Absolutely.

Q What was the basis for your belief that there is no UNIX in Linux?

A I actually reviewed it.

Now that last is interesting, don't you think? He had, in other words, a solid basis for saying what he said. He had looked. This is an example of how the lawyer on your side can amplify and bring out things that you can't when the opposing lawyer is asking questions and you have to just give direct answers. Stone gave direct answers, without worries or any long explanations. He didn't need to, because Acker does that for him.

Update: I thought you might like to know a little bit about Stone's background, to give more context to his reviewing the code. This is a press release Novell put out back in 1997 when Eric Schmidt, then CEO of Novell, recruited Stone to come work for him, and I'll hone in on the biographical details, so you will see that if there was a problem with the code, this is the guy who would notice:

In the most recent of a series of moves to extend its leadership in network services, Novell, Inc. today announced the appointment of Christopher Stone as senior vice president of strategy and corporate development. Stone comes to Novell from the Object Management Group (OMG), the world's largest industry-sponsored software development organization, where he was founder, Chairman and CEO. At OMG, he led industry-wide development of the distributed object technology underlying the new generation of network applications and services. At Novell, he assumes responsibility for the company's network services strategy, including software architecture, strategic partnerships, and developer relations. He will report to Novell Chairman and CEO Eric Schmidt, with his appointment effective September 2, 1997.

"Attracting world-class talent is a top priority in building a world-class organization," said Schmidt. "Chris Stone is a proven entity and exactly the right person to establish Novell as a major force in the Internet. He has a demonstrated ability to bring together the brightest ideas and top talent to produce real-world solutions for customers."

Schmidt added that object technology will play an increasingly important role in the implementation of Novell's network services strategy. "Chris is one of the industry's foremost visionaries in distributed object computing," he stated. "His vision of object technology enabling a world where 'everything's connected,' is perfectly in synch with our vision at Novell."

Stone brings over fifteen years of major contributions to the software industry to his new role at Novell. In the mid 1980s he created the concept of distributed object computing, an approach to network software development and deployment that efficiently divides programs into discrete components, or objects, that can be distributed across the enterprise and the Internet. His ideas have quickly become the mainstream in network software development and neatly complement Novell's strategy to provide secure, managed access to all network information and objects through a comprehensive set of network services.

"After focusing a considerable portion of my professional life on network software, it's the opportunity of a lifetime to join the world leader in networking," said Stone. "Eric Schmidt is putting together an Internet all-star team, and I'm thrilled to be a part of it. Our goal now is to enable new classes of applications and activities for our customers and developers. Part of that effort includes getting closer to customers, listening to their concerns and understanding their requirements."

Before founding the Object Management Group, Stone worked for eight years at Data General Corporation, where as group manager and director of software products he formulated strategy for integrated office products and helped pioneer the office suite and groupware concepts that have become widely accepted by businesses today. He graduated from the University of New Hampshire in business and computer science and attended the Executive Management program for business at the University of Virginia's Colgate Darden School.

So it's not like Darl McBride looking at the code. Stone knew was he was doing. And he saw no problem with Linux code. For those curious, here is the press release when Schmidt joined Novell from Sun, showing that he's no slouch either in the coding department. - End update.]

Acker now brings him back to the conversations with McBride:

Q After coming back to Novell in 2002, when was your first recollection of issues arising with respect to Mr. McBride and SCO?

A In the later part of 2002, e-mails were coming in to people that worked for me as well as the legal department from Mr. McBride with respect to whether or not Novell wanted to participate in a campaign that they were putting together called the SCOsource....

Q What was the substance of your conversation with Mr. McBride during this first call?

A Whether or not we would like to participate in that organization [UnitedLinux] as a board member.

Q He was asking you that or vice versa, you were asking whether he would help you get --

A He was asking whether or not we would like to participate, and then in return for that he was looking for money, and then he was looking for us to give up our $8 million royalty stream, so he was negotiating.

Q What was your response?

A No.

There were more calls. McBride asked him to meet with Ralph Yarro, which he agreed to do, and Yarro asked if he'd review the code, and he said he would provided there was an NDA:
Q Did you have other conversations with Mr. McBride or Mr. Yarro after that?

A Yes. I met with Mr. Yarro, it was late May. It was in my office in Provo, Utah. Again, a relatively strange conversation. He came by asking the same questions that Mr. McBride was asking, if you just could take care of -- he was more explicit, if you could take care of this copyright issue. He also -- at that time he owed us $18 million.

Q What was Mr. Yarro's position at that point with respect to SCO?

A He was the chairman.

Q When you say he owed you $18 million, who owed Novell $18 million?

A SCO.

Q For what?

A If was an old lawsuit that had to do with a product called DR DOS. And we had won a case. They clearly owed us $18 million for a long period of time.

Q What did Mr. Yarro say to you?

A He was trying to negotiate a price concession.

Q What was your response?

A No.

Q Was there any other conversation between yourself and Mr. Yarro?

A He asked if I would like to meet with Darl -- with Mr. McBride and his team and review the code -- the offending code between UNIX and Linux, and I said absolutely.

Q Did that ever take place?

A No, that never took place.

Q Why not?

A Because we made a number of attempts -- this was in around May, I believe it was the 24th, we made a number of attempts to meet with Mr. McBride and his team. I asked for an NDA, I asked for it four or five times, the detail that we would be able to review the source code.

Q When you say NDA, what do you mean?

A A nondisclosure agreement that gave us the right to look at the source code. He had made -- he, meaning Mr. McBride, had made many public statements that they were going to show the offending code and never did. So I wanted a legal agreement allowing me to see it.

Q Was SCO or Mr. McBride willing to do that?

A He appeared to be, but I never received it.

Q So what happened?

A I canceled the meeting.

Isn't that interesting? This is new information to me, and it's very revealing, in that at the time SCO was complaining to the media that they were offering to show the code, and that everyone had to sign an NDA first. Yet here, when Stone agrees to look at it, they make it impossible for him to do so. In further testimony, it turns out he was sent an NDA, but one that didn't allow him to view the code.

Acker now brings him back to the O'Gara phone calls:

Q Did you speak with Ms. O'Gara the evening prior to May 28th, on May 27th?

A Yes, I did.

Q What was the substance of that call?

A She kept quizzing me asking me questions about products, about press releases, about UNIX and Linux. As I said previously, she had an enormous amount of information that I was very concerned about. I told her nothing -- she played the hot and cold game. I told her nothing and that she had to call our PR representative, Mr. Shuster. She called me again the next morning, and I said nothing, please call Mr. Shuster.

Q Did you ever tell Ms. O'Gara that Novell was intentionally putting out its press release on May 28th to somehow impact SCO's earnings release?

A No, I did not.

When a journalist calls you back, it means she didn't get what she was hoping to get the first time. Was there a goal in mind, a preconceived set up? In any case, he says clearly that he said nothing to her except to contact their PR guy.

Next, we come to the recent phone call where Darl asked for money:

Q Did you have a conversation with Mr. McBride in the last few months?

A Yes, I did.

Q Can you tell the ladies and gentlemen, first of all, what you do for a living, and the substance of that call?

A I am a venture capitalist here in Salt Lake City with Epic Ventures. It's affiliated with Zions Bank. He called me and asked me if I would be willing to invest in a new company he was working with.

Q Did that surprise you?

A Yes. I thought it was fairly strange. I had not talked to him in years. And he also said to me something I thought was odd is that, oh, don't worry about the Maureen O'Gara thing, it's not an issue. I said whatever. Thank you for calling.

Q Have you had any further conversations with Mr. McBride?

A No.

"Whatever. Thank you for calling."

On redirect Singer goes back to the phone calls from McBride asking for clarification of the copyright ownership, and he reads to him from an email from Greg Jones, a Novell lawyer:

Q Since this is in evidence, I am just going to read to you part of the e-mail. Today Dave Wright and I -- the I would be Greg Jones, attorney for Novell -- spoke with Darl. He wants Novell documents that help give the history of SCO's rights to UNIX. Mr. Stone, that's consistent with what conversations you had with Mr. McBride where he asked not for a transfer to copyrights but something to clarify the ownership of the copyrights, correct?

A That's correct.

Q As far as you know, neither SCO nor Novell at this point had Amendment No. 2 in its possession -- or at least was aware of Amendment No. 2, correct?

A As far as I know.

Q He says he wants this information to support possible efforts by SCO to assert claims relating to infringing uses of SCO UNIX libraries by end users of Linux. Then you see it says, as Novell still receives more than $8 million each year from retained revenue streams for old versions of UNIX, Darl suggested that SCO's efforts may lead to Novell receiving greater revenues. Now is it your testimony, sir, that in the early part of 2003, Mr. McBride reversed course and said we don't want you to keep receiving any of this revenue? Is that your testimony?

A Yes.

"As far as I know." That could mean he doesn't believe SCO didn't have an awareness of Amendment 2. But the significant piece is that Darl told Novell that if they helped SCO with this, they could increase their revenues from "old versions of UNIX". If so, that means they were talking not about UnixWare but about Unix SVRx, because Novell only got revenue from the latter. Later, SCO tried to spin it that the SCOsource license agreements were about UnixWare, but you can see right here solid proof that this was not the way it really was envisioned.

Another interesting piece of information that we didn't know before is that Novell wanted to replace SCO as the fourth member of UnitedLinux, and that SCO was offering that to them.

Maureen O'Gara:

Next up is the O'Gara video deposition. It falls flat, though, because this very believable Mr. Stone has already characterized her, essentially, as a liar. She can't remember his exact words, just what she understood. She has no notes. For a journalist, that is more than unusual. I find it very telling that SCO chose not to put her on as a live witness. On the "jab PJ" business, I notice that she says that Blake Stowell fleshed out what that jab should be, but I've never seen that, and she doesn't elaborate, so it will have to remain one of life's little mysteries.

John Maciaszek:

This is another live witness. Brent Hatch is handling this and he tells him that he has a bit of the flu, and Maciaszek responds that he has a cold himself, and the examination begins. He goes through his work history, beginning with AT&T as a software developer, and then in 1991 he went to USL, as product manager for UNIX products. When Novell bought from USL, he moved to Novell, and in 1993 he moved on to SCO and then to Caldera. He says that he was supposed to come up with a Statement of Work, he along with 15 or 20 others. He says that the target date to finish the statements was February 1, which means it would be after the closing, and the statement says that they were to change the copyright notices on the boxes to say SCO instead of Novell. That sounds bad, but stay tuned for the explanation in cross.

Hatch shows him a letter sent to Siemens by Novell:

Q. Okay. In the letter --

Let's highlight the first paragraph, Mr. Calvin, if you would.

It says: As you may have heard, Novell has transferred to the Santa Cruz Operation, Inc., SCO, Novell's existing ownership in UNIX-based offerings and related products, collectively the transferred products.

Do you see that?

A. Yes, I do.

Q. Is that consistent with what you were told to tell the customers as part of the transition team for Novell?

A. Yes, it is.

Q. Now, these meetings -- well, let's see.

Let's go down also -- Mr. Calvin, could you highlight the "please direct" paragraph.

In the letter it also said:

Please direct all future correspondence regarding this matter to SCO at the following address.

Why did he do that?

A. Well, there was a lot of -- first of all, payments of royalties and other things needed to be -- we needed to notify them who the new receiving parties were going to be at SCO for any of that correspondence.

Q. Okay. Why would they -- why would you do that?

A. Because SCO is now the owner of the products, and all dealings have to go to SCO.

His testimony is that he understood that all the intellectual property transferred too. But we know it didn't, so he is mistaken. Even SCO has admitted that the contract didn't include patents, for example, so this witness is simply wrong. And the money was to be sent to SCO because SCO under the contract was supposed to collect for Novell, for a small fee, the SVRx royalies, which Novell retained.

Hatch shows him another letter, to Tad Tung:

Q. This is similar to the letter we just saw with Siemens that went off early in the transition period?

A. Similar, yes.

Q. And had similar language.

Just highlight the first few lines in the "this is to inform" paragraph, Mr. Calvin, if you would, please. Just do the whole paragraph.

It says:

This is to inform that you with respect to each of the Novell offerings listed on Attachment A, for which you are currently licensed, Novell's right as licensor under such agreements have been assigned to the Santa Cruz Operation.

Do you see that?

A. Yes, I do, basically telling them that the business had transferred.

Ah, but *which* business? The letter clearly says SCO got rights to license. That is all it says. And they did. This doesn't say the whole business plus copyrights were now SCO's. SCO complains in its appeal that the jury didn't give credence to SCO's witnesses. But really, this is very lame stuff. The jury can read, and they can see with their own eyes that the APA says no patents were to go to SCO, so they know the whole business didn't transfer.

He testifies next about the IBM buyout. He first learned about it in 1996 when Larry Buffard of Novell called him and said they wanted to do the buyout with IBM. He reacted negatively. Here's why he says he objected:

A. Well, yes, from multiple levels. I mean, first of all, a buyout of any kind at that point would fly in the face of a strategic direction of the APA, which was, in effect, to get customers who were on SVR 3.2 and earlier or later releases to move to UnixWare. A customer with a buyout would be not very readily disposed to making a transition, number 1. Number 2, he was asking us to modify source code rights, which we fundamentally objected to. The bulk of that revenue belonged to us. Number 3, the pricing he was asking for, in my opinion, was ridiculously low.
The bulk of that revenue belonged to SCO? I can't square that with the APA, where all SVRx royalties would go to Novell, then Novell would pay SCO the 5 per cent commission for collecting it. Novell must have thought they had the right to go ahead, because they did. SCO then instituted a lawsuit, or began to, he testifies. But instead Amendment 2 happened, which he says "made it very clear that this could not be done without joint approval by both parties." But if SCO really got the entire business, why would they need Novell's approval for anything?

On cross, Michael Jacobs shows him an internal email with a discussion of this event:

Q. And the e-mail says:

I believe that Novell views that a section of the asset transfer agreement gives them that right. That section is the one that deals with Novell being the company that can change terms on existing UNIX licenses and direct SCO to make those changes. I think Novell would also view that only they have the ability to renegotiate the existing agreements. Do you see that?

A. Yes, I do.

Q. And then, Biff goes on and says:

That is my understanding from reading the agreements and from discussions while at Novell. It seems you think the intent of the agreement was different from SCO's viewpoint. Given that, we need to talk in depth and determine what SCO should do to force clarification.

Do you see that?

A. Yes, I do.

Q. So you understood that Novell genuinely thought, at the time, that it had the right to do buyouts of SVRX agreements, correct?

A. Well, that certainly was Biff's position at that point, yes.

So, he's bringing out that Novell understood the APA to give them the right to do what they did. He then points out that SCO did a buyout with Sun later unilaterally. The witness says it wasn't a buyout, but of course it was, so by now I'm wondering if this software guy actually knows enough about legal things to interpret such matters. There is a less kind way to look at things, but I will leave it there.

Here's some great lawyering. The witness has been telling the jury that they were instructed to put Santa Cruz copyrights on the boxes, so notice how Jacobs undermines that testimony:

Q. Thank you, Mr. Maciaszek. Now let's talk for a minute about UnixWare. You mentioned in Mr. Hatch's questioning of you that part of your responsibility was the transition of the UnixWare product that was under -- that was undergoing work, at that time, between Novell and Santa Cruz, correct?

A. Yes.

Q. And that release was going to be UnixWare 2.1?

A. That is correct.

Q. And you were instructed to put the Santa Cruz copyright notice on UnixWare 2.1?

A. Yes.

Q. The then current release of UnixWare that was going to go out from Santa Cruz, correct?

A. Yes.

Q. UnixWare is an amalgam of code from a variety of sources, correct, sir?

A. That's correct.

Q. It includes Netware code, correct?

A. Yes.

Q. Did you think that, by putting the Santa Cruz copyright notice on UnixWare 2.1, you were claiming copyright ownership to Netware?

A. No.

Q. So, we have to be a little more grandular, don't we, when trying to -- a little more specific in trying to understand what a copyright notice really means, correct?

A. Well, one could say that, yes.

Indeed, one would have to. So now the jury understands that you can put your copyright on the box if it is your released product, but that doesn't mean you own all the copyrights in the product. Once the witness has agreed to this, the implications are severe for the letters he's just testified about:
Q. Similarly, we saw -- we've seen a lot of letters that went to customers in the winter of 1996 that said that Novell had transferred its ownership interest in UNIX, UnixWare, various formulations, to Santa Cruz. You recall the letters that Mr. Hatch asked you about, correct, sir?

A. Yes.

Q. Did you think that those letters were informing the customers that Novell had transferred its ownership interest in the Netware components of UnixWare?

A. Absolutely not.

Q. The customer didn't really need to know that level of detail, did they?

A. In terms of what, the imbedded products that were included in the release?

Q. Correct.

A. Right.

Q. They just needed to know, look, the business is transferring in some large sense to Santa Cruz. After the transition, you're going to deal with Santa Cruz. Correct, sir?

A. That was fundamentally what they were being told.

Q. And that was really all they needed to know at that point, didn't they?

A. Well, they needed to know that we had the rights to do what we were doing. And there was no question -- there was no dispute about that, right, sir? It was very clear that Santa Cruz was going to be the face, under the asset purchase agreement, to the customers, right?

A. Among other things, yes.

Q. So they were going to, for example, collect all the royalties and pass them through to Novell on a 95/5 percent basis?

A. That was part and parcel of what was being done, yes.

Q. But the customer really didn't need to know that, did they?

A. What, that we were transferring 95 percent? No, I don't think so.

Q. So the letters don't say anything to the customers about, oh, by the way, we are going to pass most of the revenue we get from your Legacy licenses back to Novell?

A. We also didn't tell them how much we paid for the business, either.

Q. So, you kind of told the customers what they needed to know in order for them to interact with Santa Cruz, but you didn't go underneath and tell them all the details of the asset purchase agreement, correct, sir?

A. Right. We would answer any questions that they had. That was part and parcel of one of the reasons we visited them.

That does away with the letters. If the letters didn't mean they owned NetWare, then they didn't mean they necessarily owned anything else. You'd have to be specific, and the letters weren't specific about that. They just told customers where to send the money and who to deal with. Jacobs is so pleasant and genial in his manner it's easy to miss how sharp he can be, like a razor. You can see the witness is aware of the damage done to his story, and like Botosan he tries fruitlessly to fix it by adding things that merely show he wants SCO to win. That never helps a witness's credibility. It's like if your mom testifies that you're a wonderful son. Folks notice the source and factor it in.

Jacobs then gets the witness to admit that in the IBM buyout deal, most of the money went to Novell, even after a settlement agreement with SCO. Hatch then tries to do damage control, and he elicits that IBM paid 10 million and of that SCO got a million and a half. So all he accomplishes is to confirm what Jacobs just said.

He then tries to fix the NetWare business but he is seriously outclassed by Jacobs. First Hatch:

MR. HATCH: Could you bring up, again, the Tad Tung letter. I think it's 751. The second page of this, if you would go to that, Mr. Calvin, and scroll down a little bit. It says: Among the products included in Amendment A are the specific products for which you are currently licensed by Novell.

Is it your understanding that's what was being transferred?

A. Yes.

MR. HATCH: Could you go to the attachment A, Mr. Calvin.

Q. BY MR. HATCH: Okay. Mr. Maciaszek, is there any Netware involved in attachment A?

A. No.

Q. Okay. What's being transferred in attachment A?

A. All of the UNIX and UnixWare products and other associated, what we called auxiliary products in Amendment 1.

Jacobs then stands up and points out the obvious, that UnixWare includes NetWare:
Q. Mr. Maciaszek, take a look, again, at attachment A to Exhibit 751.

A. Yes.

Q. The second line is "All UnixWare releases up to and including UnixWare release 2."

Do you see that?

A. Yes.

Q. UnixWare includes Netware components, does it not, sir?

A. Yes.

Q. So your answer to Mr. Hatch was incorrect; isn't it, sir? This UnixWare is referring to a product that embraces code that consists of new code, old code, Netware code, Legacy UNIX code; correct sir?

A. Well, that product contains lots of stuff, including third-party code, which we had the rights to because all the contracts were assigned.

Q. Under license, sir, correct?

A. Under contractual agreement, yes.

Q. But, in saying that we have acquired ownership of those products, you were not intending to convey --

A. We owned the products.

Q. And not necessarily --

A. And not every component contained --

THE COURT: Mr. Maciaszek. I'm sorry. Mr. Jacob is going to ask you the question.

THE WITNESS: Okay.

Q. BY MR. JACOBS: You and I are actually in sync. You owned the products, as a whole, in the large sense, but there could be old code that you don't own, there could be Netware code that you don't own, and the two would coexist perfectly well, sir, wouldn't they?

A. No. I wouldn't agree with exactly the way you said that. I mean, we owned code other than the code that we specifically didn't own, which would include Netware and some third-party stuff that we had rights to, to ship for either royalties or for no charge. I am not talking specifically about prior releases of UNIX. We owned that stuff.

Q. Well, and that's what's in dispute in this lawsuit, sir, correct?

A. Ownership rights? My view is that -- I don't understand how you can claim that you own it if the APA says that you sold it.

Q. Well, and that's precisely what's in dispute, sir, correct?

A. I don't know what's exactly in dispute.

Q. But the point is that by saying you own something at the product level, and informing customers that ownership of the products has transferred, you're not necessarily saying anything about particular lines of code that are embedded in that product. Isn't that true, sir?

A. Well, we certainly are not saying that we own the Netware stuff, yes.

MR. JACOBS: Thank you very much, sir.

This is a work of art. To me. Legal art. Just so beautifully done. And by now the jury may be saying to themselves something like this: "This guy is a software programmer. He knew UnixWare has NetWare in it. So when Hatch asked him if NetWare was on the list, why didn't he admit that it was? And since he says he doesn't know what the dispute is about, how can he know who owns what for sure, if it's just what he understands from reading something, when others read it differently?"

Hatch then makes it worse:

Q. Just to the point Mr. Jacob just raised, to the extent there was anything that Novell had retained, they --

Go ahead to page 4 of this. Let's see. Keep going. No. Back. I went too far. Back one more. All right. Highlight the middle part of that.

It says:

If you are also licensed by Novell for source code offerings other than those listed in attachment A, then you should contact Novell.

Is that what that's saying?

A. Yes.

MR. HATCH: Okay. Thank you, Your Honor.

MR. JACOBS: I'm sorry, Your Honor.

RECROSS EXAMINATION

BY MR. JACOBS:

Q. Mr. Maciaszek, Mr. Hatch just misled you, didn't he? Didn't he, sir?

A. I don't know what you mean.

Q. Isn't it true that that is referring to completely different products, such as Netware, licensed at the product level, and not referring to code that's embedded in UnixWare?

A. It's referring to specific products other than those listed on the list, yes.

MR. JACOBS: Thank you, Your Honor.

Poor Mr. Hatch then unwisely stands up and says, "Those that aren't on Exhibit A?" And the witness agrees. SCO has had a problem understanding the tech from day one, and this highlights the difficulties that can cause. They could have learned it from Groklaw, ironically, but they chose not to believe us, I guess. But the information was available to them, so I don't feel sorry for them one bit.

This witness is done, although he requests to know if he can stay and listen, and he's told he can. He's clearly deeply committed to this case.

Andrew Nagle:

He's Senior Director of Product Development at the SCO Group, meaning he's head of engineering. He is asked what are the company's current products:

Q. What are those current UNIX products?

A. The currently shipping binary UNIX products are OpenServer 507, OpenServer 6 and UnixWare 714. In addition, there are a long list of source code products that are available for those who express interest.

Nagle repeats the story about copyrights, but this has already been dealt with and explained by Jacobs. He's talking about copyrights from 1995 onward, and of course they would say Santa Cruz. He reads a copyright notice which says copyright 1996 the Santa Cruz Operation. But that is after the 1995 APA deal. However, he says that they removed Novell from the UnixWare copyrights. But of course they wouldn't put Novell as the copyright owner of Santa Cruz's product.

During the break, when Jacobs raises an issue about the Novell answer to SCO's Second Amended Complaint, it gets confusing. SCO wants to show the jury that in Novell's Answer, they said Unix and UnixWare:

MR. JACOBS: As has become clear from the testimony, Your Honor, the words that were chosen six years ago have now become sharpened and clarified with the benefit of the actual trial. It has never been Novell's contention, to begin with, and I think this is clear from lots of back and forth, the UnixWare that Santa Cruz developed and that SCO developed after the asset purchase agreement, that Novell claimed copyright in those entire products. So the answer would be confusing, as read. It would be quite confusing to the jury to hear.

Secondly, the actual evidence that's come in at trial is that Novell has said we owned the, quote, UNIX copyrights. And so I think that's going to be confusing to the jury as well. The actual statements say UNIX and do not say UnixWare. Our procedural proposal was to amend the Answer, if that's necessary. I appreciate where Mr. Singer is coming from. It's in the Answer. But now we know a lot more and the jury knows a lot more, and we are concerned about confusion.

THE COURT: Mr. Singer?

MR. SINGER: This is an admission. Our contention is that when they slandered our title, it was both the UNIX and UnixWare. It was alleged that way. The statements say, specifically, for example, SCO subsequently registered claims to UNIX and UnixWare copyrights with the United States copyright office. They specifically alleged. Novell admits that on May 28, 2003. Jack Messman sent a letter to Darl McBride of SCO in order to assert Novell's claims to the UNIX and UnixWare copyrights. This is a company that is well aware of what UnixWare is and what UNIX is. These have never been amended.

I am entitled titled to have them put before the jury as admissions of Novell that when they put out this slander it applied to UNIX and UnixWare products. And this is an 11th hour change to try to say, "Well, we only asserted claim to UNIX. We didn't assert claim to UnixWare." Their statements pertain to both UNIX and UnixWare, and I am entitled to put that in.

The judge doesn't think Jacobs has a leg to stand on so that's his decision. If you would like to see Judge Ted Stewart at work, at his best, I'd say look at pages 1742 through 1758 , where there is a deep discussion between him and Brennan and Normand about what Ryan Tibbitts will be allowed to be asked. What you will see is how seriously he takes both sides' arguments, and how willing he is to hear both sides. In this instance, he splits the baby, but in a reasonable and fair way. I have to say that the picture we are allowed to see in this sidebar makes my respect for Judge Stewart grow.

All this time, poor Mr. Nagle has been sitting there, waiting to resume his testimony. So at the very end of all the discussions with the lawyers, Judge Stewart apologizes to Nagle and says he hopes this makes him glad now that he's an engineer and not a lawyer, to which Nagle replies, "Yes, Your Honor. I assure you we have equally Archean discussions in our field." I'm thinking Archean was perhaps actually a misspelling for arcane, but the reporters have to move very, very fast, and Archean fits too.

And so the cross examination begins. But right away there is a need for a sidebar, and SCO wins the point at first, but we learn something. Jacobs wanted to show Nagle an email of his where someone told him that UnitedLinux was a reason some didn't want to take a SCOsource license. He's not allowed to do that, the judge first rules, because on cross you are supposed to stay within the confines of what he was asked in direct. But then Jacobs says he'll have to recall Nagle when Novell puts on its case in chief. He basically lets SCO know that it's A or B, ask him now and/or let the exhibit in, or recall this witness later. And the judge tells Normand that he'd have to let him be recalled. So Normand relents and says Jacobs can ask Nagle his questions.

Of course, this presents Novell with the opportunity to let the jury know that in November of 2002, SCO released a version of Linux for the enterprise in association with the UnitedLinux consortium. Normand then raises a relevance objection to last for the entire five minutes that Jacobs has been given to ask these questions. He shows Nagle the email, and it's a copy of the InfoWorld article quoting SUSE as saying that their customers should have no worries about SCO, because due to the UnitedLinux agreements, SCO has no claim against them. Jacobs asks if this wasn't one of the issues in the marketplace that would incline them not to buy SCOsource, because of believing they were immune. Nagle first says he isn't sure he can "cite firsthand knowlege of that issue" but it's his email. He lived this, and of course he knows. He was a salesman, for heavens' sake. If he had no personal knowledge of this, he wasn't doing his job.

Jacobs solicits an admission that is crucial:

Q. Could you explain what is going on in the plan underneath that box?

A. Yes. This describes the activities that were going to go on to transfer certain intellectual property from the Novell source code archives to the Santa Cruz source code archives.

Q. So in your answer, sir, you embrace the real focus of my question. What does the word intellectual property refer to there?

A. It refers to the source code, it appears.

Q. And isn't it true, sir, that sometimes when people use this phrase, intellectual property, they're using it to refer in some loose sense to technology or the intellectual assets of the company and not necessarily to patents, copyrights or trademarks?

A. Are you asking for a layman's interpretation of that phrase?

Q. Precisely.

A. It can be used in lots of different ways. That is why there are intellectual property attorneys.

Q. This document evidences a lay person's use of intellectual property when it refers to source code, correct?

A. Yes.

So the earlier toxic testimony is undermined. IP can mean copyrights, but it doesn't always when nonlawyers are talking. And in the document he is showing Nagle, a transfer document outlining what was to be done, it isn't lawyers writing.

Next Jacobs shows him the AT&T/IBM license agreement, specifically the paragraph that details how copyright notices were to be written, Section 2.08, subparagraph b:

Each portion of a sublicensed product shall include an appropriate copyright notice. Such copyright notice may be the copyright notice or notices appearing in or on the corresponding portions of the Software Product on which such sublicensed product is based or, if copyrightable changes are made in developing such sublicensed product, a copyright notice identifying the owner of such changes.
Nagle agrees that this was the way it worked, that if anyone wrote code, they got the copyright on it. So, Jacobs tells him that when Santa Cruz got UnixWare, it was 7 million lines of code. Today it's 14. And there's no dispute about the ownership of those additional 7 millions lines that SCO wrote. But Nagle makes a stronger claim:
Q. Isn't it the case that in those lines of code, one would expect to see a Santa Cruz or a SCO copyright notice?

A. No, sir. Um, the copyrights that we had -- that we added to our source code products were added only at the time that we published the source code products. So that, um, when we created a source code product that was associated with, for example, UnixWare 2.1, the act of creating that source code product inserted copyright notices into all of the code because we owned the copyrights in all of the code. We did not as a matter of engineering and development practice on a daily basis add new copyrights when we the owner of the copyrights added code to the databases.

Um, what I said in my earlier testimony is that when we received code from a third-party, and the third-party owned the copyright, we felt obliged to record that copyright ownership. But since we owned all of the copyrights in the source in the database, except where it was already noted that a third-party owned the copyright, there was no need to add the copyright notice on a daily basis, only when we published it and that is when we did it.

That sounds damaging until he is asked a followup question which brings out that SCO did not go through the older versions of UnixWare and change the copyrights on them, just on the product they were about to release:
Q. You did not go back and change the copyright notices at that point in time as to UnixWare 2.0, UnixWare 1.0, SVRX -- no, sorry, System V Release 4.2MP; correct?

A. No, we didn't. These products were already done and dusted. They were on the manufacturing shelf, masters were available to be duplicated. It was our understanding that we could continue to ship those products with copyright notices as they existed in those products at the time that these were mastered. It was our understanding that the actual establishment of the ownership of the copyright in those codes was established by the legal agreements, not the notices, notices that existed in those old products.

So again, it turns out he is talking only about UnixWare 2.1. Next Jacobs shows him an IBM CD with AIX on it. He's established that AIX, like UnixWare, is another flavor out of many flavors of UNIX. And what is on the CD? An IBM copyright. So, Jacobs asks, then seeing a copyright notice on a CD doesn't actually tell us who owns all the copyrights in the box, does it? Nagle agrees that by putting a copyright notice on that CD, it was not making a claim to own the copyrights to UNIX System V:
Q. In fact, you would not understand it -- you would not understand IBM to be making a claim of ownership of UNIX System V merely by putting a copyright notice on the box of AIX?

A. Um, I would not. I would assume that they would respect the legal ownership of the underlying copyrights as established by the appropriate agreements.

On recross, Normand brings out something I haven't heard before, that Caldera, under Ransom Love, refused to contribute any intellectual property to UnitedLinux and contributed some technology but not the "core technology that was driving" the business. That, if true, would impact the arbitration, I would think. But who knows if it's true? Because Nagle goes on to stick to his story about changing the copyrights:
Q. Did Novell change the copyright notices on their existing version of UnixWare even before SCO had made any changes to it?

A. No. Because the changes in copyrights were always done in the last month prior to ship.

Q. And is it your understanding today, that Novell engineers in 1995 changed copyright notices on UNIX code that Novell is now claiming to own copyrights to?

A. Yes, that is my understanding.

I don't know what he means about Novell claiming to own it, but again he's talking only about changing the copyright on the release Santa Cruz did. He does explain the difference between Unix and UnixWare:
A. It would be -- it would be the equivalent of having purchased a car from someone and then years later they come to your front door and say give me the engine for my car. The engine to UNIX is the kernel, it is the core of the operating system that actually talks to the hardware. That it tells how to reach into memory, how to -- how to read or write from the disk. All of that technology, the basis for that technology, reaches back to the development of 4.2MP that was done at UNIX System Laboratories. It was brought forward into UnixWare 2, it was brought forward into UnixWare 2.1 and it is still there.

Q. Is it true that if you took the old UNIX pre-1995 UNIX out of UnixWare 7?

A. It wouldn't work.

Here's a list of everything in UnixWare 7, by the way, if you are curious:

Nagle and Normand portray it that UnixWare is 90-95% Unix, but I wonder if that can be accurate. As for not working, nothing works without a kernel. That doesn't prove that the copyrights belong to SCO. It's like with a Red Hat Linux product. It will have a Red Hat copyright notice on the box, but the kernel is not copyrighted by Red Hat. That doesn't impair Red Hat's ability to sell Linux one little bit, even though it is absolutely true that without the kernel, their product wouldn't work. So, a little flim flam from SCO, but who knows if they even know it? But Nagle is an engineer, so he certainly should.

Then it's the end of the day for the jury, but once again the judge cautions them not to discuss the case with anyone and not to do any research.

The transcript of this day is in three parts: part 1 [PDF] [Text], part 2 [PDF] [Text] and part 3 [PDF] [Text].

Update: In researching another issue, I came across an exhibit attached to Wayne Gray's filing seeking permission to file an amicus brief with the 10th Circuit during the time period of SCO's first appeal, attempting to intervene. His request was denied, and I can't vouch for the exhibit, obviously, but it's of interest probably to historians at least. So here is the filing, and the exhibit, Exhibit A, is a 2003 letter, unsigned but written so as to make it an agreement had Novell ever chosen to sign, which it did not, showing the clarification requested. Note that according to the letter, they asked Novell to say that it was their understanding that the APA itself, not Amendment 2, transferred all of the rights and obligations under the various AT&T SVRX Software Agreements and Sublicensing Agreements... excepting only the ongoing right to receive royalty payment streams..." It goes on to "clarify" that UNIX mark was excluded, but that the copyrights were not excluded assets. That isn't the SCO story any more. And note the date of the letter is *after* SCO told the world it had found Amendment 2, which happened in June of 2003.

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

1576


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 19, 2010
Jury Trial

REPORTED BY: Patti Walker, CSR, RPR, CP
[address]

1577


A P P E A R A N C E S

For Plaintiff: Brent Hatch
HATCH JAMES & DODGE
[address]

Stuart Singer
BOIES SCHILLER & FLEXNER
[address]

Edward Normand
BOIES SCHILLER & FLEXNER
[address]

For Defendant: Sterling Brennan
WORKMAN NYDEGGER
[address]

Eric Acker
Michael Jacobs
MORRISON & FOERSTER
[address]

1578


I N D E X
Witness Examination By PAGE
Christopher Stone Mr. Singer (Direct) 1590
Mr. Acker (Cross) 1624
Mr. Singer (Redirect) 1639
Maureen O'Gara (Deposition)
Andrew Nagle Mr. Normand (Direct)
Mr. Jacobs (Cross) 1779
Mr. Normand (Redirect) 1785
Mr. Jacobs (Recross) 1785

1579


EXHIBITS RECEIVED INTO EVIDENCE: PAGE
Plaintiff's:
582 1592
243 1615
260 1616
563 1641
38 1769

Defendant's:
E-32 1609
I-11 1763
E-1 1771

1580

SALT LAKE CITY, UTAH; FRIDAY, MARCH 19, 2010; 8:30 A.M.

PROCEEDINGS

THE COURT: Good morning, counsel.

Are we ready for the jury?

MR. BRENNAN: Your Honor, we just have a couple of brief housekeeping matters that we would like to raise with the Court, if we could.

THE COURT: Go ahead.

MR. BRENNAN: First of all, I wanted to inform the Court that Mr. Dana Russell, who has been Novell's client representative, the CFO, was not able to be in court today. Mr. Jim Lundberg, who is in-house general counsel, is with us today. I want to introduce you to Mr. Lundberg.

Mr. Jacobs, has two matters, and I have a brief one that I would like to raise with Your Honor after that.

THE COURT: Go ahead, Mr. Jacobs.

MR. JACOBS: Your Honor, I will raise the ones that may relate to the activities in the next hour and a half and then at the next break we have a few other housekeeping matters.

With respect to trial time, first of all the clock, which may relate to how both sides use their time in the next hour and a half. Our calculation of the clock so far is that SCO has used 14 hours, 40 minutes, Novell has used 15 hours, four minutes. SCO's calculation is that SCO

1581

has used 14 hours, 37 minutes, virtually identical to ours, and then Novell has used 15 hours and 38 minutes.

Mindful of the Court's reminder that we need to be getting this case to the jury by Friday at noon, our calculation is then that closing arguments are on Friday morning and that evidentiary matters are finished by the close of the court day on Thursday, we're neck in neck in terms of use of the clock. And really what we now have to be looking at is not necessarily where we are on the clock to date, but how much time we have remaining and to budget our time accordingly based on what each side has used. The differences between us and our clock times, I don't mean to debate now, it's just to signal to Your Honor that we're close.

Interestingly, we're also calculating the amount of evidentiary time each day is about three hours and 43 minutes on average. So in terms of sort of a warning to ourselves and to the other side about budgeting time going forward, we're going to adhere to the Court's schedule.

The second matter, Maureen O'Gara's video deposition will be played today. We sent over last night an additional authenticating snippet of her testimony to authenticate a document that's already on the trial exhibit list. SCO objects to that.

Then previously --

1582

THE COURT: Let's deal with these one at a time.

Why do you object, Mr. Normand?

MR. NORMAND: Mr. Jacobs, can I ask you if you were just referring to SCO Exhibit 172 or Novell Exhibit C-29?

MR. JACOBS: I'm referring to that which would authenticate, C-29.

MR. NORMAND: Your Honor, our understanding is that Novell wants to put in this Exhibit C-29. May I approach and give Your Honor a copy of this proposed exhibit?

THE COURT: I have it right here unless it's new. Is this new?

MR. NORMAND: This is not a new exhibit, Your Honor. This is an exhibit that has at least two fundamental problems. One, it's extremely prejudicial to SCO. It's an e-mail string that refers -- the second page which is really a screet against SCO, and the third or fourth page which has testimony that we had previously agreed with Novell -- actually, that Your Honor may have excluded as to the testimony from the deposition that prefers to Bill and Hillary Clinton and draws a comparison between that and the SCO situation. That testimony in the deposition was excluded.

Now, as I understand it, Novell wants to put in

1583

the e-mail chain that has both that reference and it has the reference with the screet against SCO that Your Honor can see is extremely prejudicial, and has nothing to do with the point that Novell wants to make, which the testimony will already make, which is there's a connection, Novell argues, between Blake Stowell from SCO and Maureen O'Gara. That point will have been made. So this is of very marginal probative value and extremely prejudice.

MR. JACOBS: We have no problem with redacting that on the portions that Mr. Normand is referring to on the exhibit that goes to the jury. We'll not highlight that for the jury.

THE COURT: You're talking about the paragraph you take SCO's side like Hillary took Bill Clinton's side, et cetera?

MR. JACOBS: That would not be shown to them.

THE COURT: What is the probative value of this e-mail?

MR. JACOBS: This e-mail is an e-mail in which Ms. O'Gara says to the public relations guy at SCO, I want more pay because she has received an angry e-mail from a reader. It's part of our case that Ms. O'Gara and SCO had an unwholesome relationship in the way they interacted with each other and that therefore Mr. O'Gara was biased.

THE COURT: Mr. Jacobs, I remember from the

1584

deposition testimony that was disputed and therefore I had the opportunity to read, regarding Ms. O'Gara. I think the Court allowed sufficient amount of deposition testimony to come in to really make that point. I see nothing to be gained by reinforcing it with this e-mail.

MR. JACOBS: Thank you, Your Honor.

Then another exhibit that's referred to in deposition testimony that was previously designated, we realized in reviewing the designations last night that the exhibit that's being referred to there was not on our exhibit list. Of course, the designations were done after the exhibit lists were done. That's S-45, and it is the e-mail in which SCO's public relations person says to Maureen O'Gara, I need you to send a jab PJ's way. So this is part of the discussion that you did allow, it's the e-mail. Otherwise the jury is going to be looking at this testimony and wondering where is the document that the witness is referring to. We redacted from that version of the e-mail, Your Honor, the actual typewritten references to Groklaw.

MR. NORMAND: Your Honor, I don't know if Your Honor has a copy of this exhibit.

THE COURT: It's P --

MR. JACOBS: S-45, Your Honor.

MR. NORMAND: Our concern with this, Your Honor,

1585

is two or threefold. One, the deposition testimony will have already made the point that Novell wants to make, which is that Mr. Stowell asked O'Gara to send a jab to PJ.

The testimony, as Your Honor will recall from the discussion last week, will already have mentioned Groklaw. We fought and lost on that front. The letter has multiple redactions to Groklaw.

THE COURT: They are out.

MR. NORMAND: They are redacted. It's going to be self-evident to the jurors what the letter is referring to. Although we appreciate Your Honor's instruction to the jury and we hope they will follow the instructions, we're getting to the point of really pushing the linex on both the marginal relevance of getting to the letter and really testing the capacity of the jury's curiosity not to follow up on this.

In addition, it's a new exhibit that we hadn't seen until last night. The O'Gara depositions have been sitting around for three days and ready to go.

THE COURT: It was apparently used at the deposition, though; is that correct, Mr. Normand?

MR. NORMAND: That's correct, yes.

THE COURT: So it's not new to you?

MR. NORMAND: Oh, it's not, but we went through this exercise a week ago.

1586

THE COURT: I see what you're saying. But it's not totally new to you. It's unlike those exhibits that they sought yesterday, which were all brand new, which the Court did not allow.

MR. NORMAND: This is not an exhibit that we've never heard about.

THE COURT: Mr. Jacobs, do you want to respond?

MR. JACOBS: No, Your Honor.

THE COURT: The Court will allow you to reference it, but do not reference it showing the e-mail.

MR. JACOBS: Thank you, Your Honor.

MR. NORMAND: Thank you, Your Honor.

MR. BRENNAN: Your Honor, just one other brief matter, and maybe I can outline the issue so if the Court would prefer to take this up a break, that might be something the Court would be mindful. We were told yesterday that the concluding witness of plaintiff will be Ryan Tibbitts, who is SCO's in-house counsel. During Mr. Tibbitts' deposition, there were a number of questions that were asked to which privilege or work product objections were asserted and no testimony was allowed. And we think exercising that shield will preclude those subject matters being raised during his examination.

In addition, he was also -- that is Mr. Tibbitts, as I understand it, was also designated as SCO's 30(b)(6)

1587

witness with respect to certain categories. In connection with deposition examination, the representation was made that Mr. Tibbitts would not be a witness on the issue of any damages.

So this is precautionary in that we think there are some subject matters that if they seek to elicit testimony, they have already objected or stated they would not present him as a witness, and I wanted to highlight that.

THE COURT: Your point is if they, at the deposition, refused to allow him to answer questions, you do not think it would appropriate for him to be allowed to answer those questions?

MR. BRENNAN: Precisely, Your Honor.

THE COURT: Mr. Normand.

MR. NORMAND: Your Honor, I propose that we speak with Mr. Brennan about what subject matters he thinks are off limits and come back to the Court if we can't agree. And Mr. Tibbetts is not planning to speak to the issue of damages.

I would also flag for the Court that with respect to at least Novell witnesses, Mr. LaSala and Mr. Jones -- at least potential witnesses, the same issue is going to arise.

THE COURT: Why don't the two of you visit at the first break and see if you can't take care of this.

1588

MR. BRENNAN: We'll do that. Thank you, Your Honor.

MR. NORMAND: Thank you, Your Honor.

THE COURT: Mr. Singer.

MR. SINGER: Your Honor, we have two brief bits of evidence to present to the jury. We wanted to find out what the appropriate procedure from Your Honor is for doing this. There are three admissions in the answer, responses to three paragraphs in the complaint that we wish to present to the jury. I could, with the Court's permission if that was appropriate, just read the allegation and the answer, and they are obviously admissions of Novell.

THE COURT: Are you going to object to this, Mr. Jacobs?

MR. JACOBS: I think I would like to see what he's referring to and maybe Mr. Singer and I could work on that at the break.

THE COURT: Would you do that, please, Mr. Singer?

MR. SINGER: Yes.

The other item, as Novell is aware, we now have a claim for punitive damages. There is one additional piece of evidence that relates solely to punitives but not otherwise would be in the case, and that is as of their most recent 10-K, what the market capitalization and shareholders equity is of the company, which would be relevant to the

1589

jury's consideration for damages. We would propose simply to mark a redacted version of the 10-K, have that stipulated into evidence, note what that amount is but not otherwise call a witness or have to deal with that point.

MR. JACOBS: Your Honor, I would propose that this be dealt with later. We are going -- we have been planning ahead for what we're going to do by way of Rule 50 motions, and one thing that we are thinking of doing, even though there is a very short period between the close of SCO's case and the close of the case, is file a motion that the question of punitives should not go to the jury.

I think, as a practical matter, if Mr. Singer wants to just move it into evidence, we'll stipulate that the document is in evidence -- maybe we shouldn't even do that.

THE COURT: Let's wait and deal with this after your Rule 50 motion.

MR. JACOBS: Sure. Thank you, Your Honor.

THE COURT: All right, Mr. Singer?

MR. SINGER: Thank you.

THE COURT: Anything else?

MR. SINGER: No.

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

THE COURT: Ms. Malley.

(Jury present)

1590

THE COURT: Good morning, ladies and gentlemen.

Red seems to be the color of the day for you here. Is this in protest of BYU's victory yesterday?

The next witness.

MR. SINGER: Thank you, Your Honor. We call as an adverse witness Mr. Chris Stone.

THE COURT: Mr. Stone, if you would please come forward.

CHRISTOPHER STONE,

Having been duly sworn, was examined

and testified as follows:

THE CLERK: If you would please state and spell your name for the Court.

THE WITNESS: Christopher Stone. C-h-r-i-s-t-o-p-h-e-r, S-t-o-n-e.

DIRECT EXAMINATION

BY MR. SINGER:

Q Good morning, Mr. Stone. My name is Stuart Singer. I'm one of the attorneys for SCO in this lawsuit. Am I correct that you served two periods of employment with Novell?

A Correct.

Q The first was as a senior vice president in corporate development from 1997 to 1999, correct?

A That's correct.

1591

Q Then you left the company and returned in 2002; is that right?

A That's right.

Q In 2002, you were there until 2004, approximately two years or so?

A That's right.

Q The second time around your position was vice chairman, correct?

A That's correct.

Q Am I correct the position of vice chairman made you the number two man at the company, second only to Jack Messman?

A That's correct.

Q You were in that position as vice chairman in March 2004 when you addressed a business conference called the open source business conference?

A That is correct.

Q You delivered a speech to the conference; is that correct?

A That's correct.

Q You are aware that that was videotaped?

A Yes.

Q I would like to show you Exhibit 582. Mr. Stone, you were shown this before at your deposition. I'm going to ask if you can identify if this transcript of the videotape is correct with respect to the

1592

statement that appears on page 5 in the last paragraph, if that was, in fact, part of your address in March 2004 to the conference?

A Yes, I said that.

MR. SINGER: I move the admission of Exhibit 582.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 582 was received into evidence.)

MR. SINGER: Your Honor, 582 consists of the videotape together with the transcript and we would like at this time to play that excerpt of the videotape which is in question.

THE COURT: Was that your understanding, Mr. Acker, that it was both?

MR. ACKER: It wasn't my understanding, but I have absolutely no objection to the video, Your Honor.

(Videotape played)

BY MR. SINGER:

Q You said those words at the open source conference?

A Yes, I did.

Q The we refers to Novell?

A That's correct.

Q The Darl refers to Darl McBride?

A That's correct.

1593

Q The chief executive officer at the time. But when you made the statement we still own UNIX, sir, was that a true statement or a false statement at that time?

A That's a true statement.

Q So it's your position in March of 2004 that Novell still owned UNIX; is that correct?

A That Novell owned the copyrights and patents, that's correct.

Q Well, let's first stick with my question. Did you say copyrights in that statement?

A No. I said own UNIX.

Q Is that statement, we still own UNIX, a true or false statement?

A It is true. I was referring to the copyrights, the patents.

Q So you equate ownership of the copyrights to essentially ownership of the business; is that right?

A Not the business.

Q When you say we still own UNIX, in your view that is a correct statement because you were referring to the copyrights?

A That's correct, copyrights and patents.

Q Now with respect to the business of UNIX, was Novell selling any UNIX products in 2004?

A Nope.

1594

Q Was Novell developing any UNIX products in 2004?

A No.

Q Did Novell employ engineers in 2004 to develop the UNIX code?

A No.

Q Now did you understand at the time of your speech that your claim, we still own UNIX, would be an important statement because there were questions on people's minds, the group that you were addressing, as to the ownership of UNIX copyrights?

A Yes.

Q That was a wide issue -- a widely interested issue, correct?

A Every day.

Q Now earlier in 2003, did you have conversations with Darl McBride about copyrights?

A Yes.

Q You knew Mr. McBride, correct?

A I never had met Mr. McBride prior to -- actually I had never met him personally. We talked on the phone.

Q You had conversations in the early part of 2003 regarding the UNIX copyrights, correct?

A That is correct.

Q Am I correct that in those conversations Mr. McBride never asked Novell to transfer copyrights to SCO but rather

1595

to clarify that copyrights, in fact, were owned by SCO; is that correct?

A When you said Novell, he never asked me specifically that question. He may have asked other people in Novell. I am not aware of that.

Q I'm asking about the conversations you know of from your testimony -- from your personal knowledge with Mr. McBride. Did Mr. McBride ever ask you to transfer the copyrights from Novell to SCO?

A No, he never said it as you said it.

Q Did he ask, however, that there be some clarification that the copyrights were owned by SCO?

A He asked for clarification many times on the copyrights with respect to the agreements, that's correct.

Q Now I would like to talk about the press releases of Novell. As vice chairman, Mr. Stone, did you approve the Novell press releases before they were issued?

A Yes.

Q And I would like you to look at SCO Exhibit 525.

MR. ACKER: Do you have copy?

MR. SINGER: This has already been moved into evidence. It's the May 28th release. I can give you another copy.

BY MR. SINGER:

Q Mr. Stone, these points will be on the -- the documents

1596

will be on the screen, but I will also give you a hard copy.

A Okay. Thank you.

Q This is in evidence. And you recognize this to be a Novell press release issued May 28th, 2003?

A Yes, I do.

Q You are familiar with this document, correct?

A Correct.

Q You understand that in this document Novell says that it still owns UNIX copyrights and SCO does not, correct?

A Correct.

Q And you approved this May 28th press release before it was issued, correct?

A That is correct.

Q And at the time you approved it, you had not investigated what the actual intent of the transaction in 1995 was between Novell and Santa Cruz by talking with the people who negotiated that transaction; is that right?

A I never personally spoke to anyone on that transaction.

Q At the time when you released this press release on May 28, 2003, at that time you had knowledge that there was an unsigned Amendment No. 2 that changed the original APA, correct?

MR. ACKER: Objection, it's argumentative as to change the APA, Your Honor. //

1597

BY MR. SINGER:

Q That amended the APA?

A Correct.

Q So you had a copy of Amendment No. 2 to the APA that was unsigned at the time you released this press release of May 28th, correct?

A I did not. I personally did not.

Q You had not seen an unsigned copy of the June 2 -- of Amendment No. 2 at that time?

A Yes, I had seen it, but I did not have it in my possession.

Q Just so we're precise here, prior to your approval of this press release, while you did not have a copy in your possession, you had seen and read the unsigned version of Amendment No. 2, correct?

A Correct.

Q Now at that time you didn't take any steps to determine whether Amendment No. 2 was signed before the press release was issued, correct?

A Could you rephrase that? I'm sorry.

Q Did you take any steps to see whether Amendment No. 2 had been executed and, in fact, was a signed agreement prior to issuing or approving this press release?

A I did not personally. Our legal staff internally did.

Q Well, as of the time that you released this press

1598

release, had you been told that Amendment No. 2 had been signed?

A No.

Q So you went ahead and approved the press release at that point without knowledge as to whether or not Amendment No. 2 was signed; is that correct?

A That's correct.

Q Did you understand that this press release by asserting to the world that SCO didn't own the copyrights in UNIX would harm SCO?

A Not at all.

Q You didn't think that would harm SCO?

A No.

Q Well, let's talk about the timing of the release. I am showing you here a calendar of 2004. Hopefully both you and the members of the jury can see it.

A I can see the calendar. I can't see the dates.

THE COURT: Mr. Stone, if you need to, you can go to wherever you need. I don't know what the questions will be asked. Don't hesitate to go look at it if you need to.

BY MR. SINGER:

Q If at any time you need to, please step down and ask me to identify a date. But I don't think we're going to be doing too many complex calculations on the calendar. Are you aware, sir, that earnings releases are

1599

important dates for a public company?

A Yeah.

Q That they are announced in advance to the investment community and the public, generally?

A Yes.

Q I would like you to assume that in 2003, earning release dates for SCO, when they announced their earnings, were the following dates: February 26th -- we'll put this green -- May 28th, August 14, and December 22. You have no reason to disagree with that assumption, do you?

A I have no reason to disagree, no.

Q Now I would like you to look at SCO Exhibit 254. This is in evidence. And do you understand this to be a press release that SCO issued on May 28th, 2003 reporting earnings for the period ending April 30th?

MR. ACKER: Objection, calls for speculation, Your Honor.

THE COURT: He can look at it and reach his own conclusion, can't he, Mr. Acker?

MR. ACKER: He can, but the question was was that his understanding. He hasn't laid a foundation for that.

THE COURT: Fair enough.

Mr. Singer.

BY MR. SINGER:

Q Would you take a look at the press release.

1600

THE COURT: Can you see it, Mr. Stone?

THE WITNESS: Yes, I can see it.

BY MR. SINGER:

Q I'll show you the document.

THE COURT: If you can read that, you've got better eyes than I do.

BY MR. SINGER:

Q Well, let's give you a hard copy of this document. This is -- you see that this a press release issued by the SCO Group on May 28th, 2003?

A Yes.

Q Do you see that it states, for the second quarter of fiscal 2003 ended April 30th, The SCO Group, Inc. reported net income of $4.5 million, or $0.33 per diluted share, on revenue of $21.4 million, compared to a net loss of $6.6 million, or $0.47 per diluted share, on revenue of $15.5 million for the comparable quarter of the prior year. Do you see that?

A Yes, I do.

Q Do you recognize this, then, to be what is considered in business to be an earnings release by SCO, a public company, that was issued on May 28th, 2003?

A Yes. It looks to be that.

Q Now do you claim that you didn't know that SCO was releasing on May 28th, 2003 its earnings?

1601

A I had no idea.

Q You had no idea. Do you know Maureen O'Gara?

A Not personally. I know who she is.

Q But you don't know her personally?

A No.

Q Didn't have any type of business relationship with her?

A Only through the press. She was a journalist in the computer business.

Q In fact, sir, you had given her your cell phone, correct?

A A lot of people have my cell phone number, unfortunately.

Q You had given her your home phone number?

A No, I did not.

Q And you had spoken to her previously as a reporter?

MR. ACKER: Objection, vague. Previous to what?

BY MR. SINGER:

Q Previous to May 28th, 2003?

A Yes.

Q Going back all the way to 1998, in fact, correct?

A Sure, yes. She was a very prolific reporter.

Q And she focused on the technology business, correct?

A Correct.

Q Which was the business you were in?

1602

A That's correct.

Q Did you have a conversation with Maureen O'Gara on the evening of May 27th, 2003?

A Yes, she called me.

Q She told you that she had heard that there was going to be a press release issued by Novell the next day, correct?

A That's correct.

Q That press release would assert that Novell owned the UNIX copyrights, correct?

A That's correct.

Q And in that conversation, did you tell Maureen O'Gara that that was, in fact, true, that the press release was forthcoming?

A No.

Q Didn't tell her that?

A No.

Q Did you, in fact, then not tell her that the reason you were releasing the press release the next day was because it was the day of SCO's earnings?

A Absolutely not.

Q Absolutely not. I suppose, then, you didn't tell her that you were doing this to up end SCO's stock or throw a monkey wrench into SCO, or any words of similar effect?

A No.

1603

Q You do agree that you spoke with Maureen O'Gara on the night of May 27th about this subject?

A I prefer to say I listened to her.

Q She knew that the press release was going to come out, correct?

MR. ACKER: Objection, calls for speculation. You said she.

BY MR. SINGER:

Q Ms. O'Gara knew that this press release was going to be issued the next day, correct?

MR. ACKER: Objection, which press release?

BY MR. SINGER:

Q The May 28th, 2003 press release from Novell, correct?

A Yes, that's correct. She had an enormous amount of information.

Q If you didn't tell her that the Novell press release was forthcoming on May 28th, 2003, do you have an understanding of how she knew that already when you spoke to her on May 27th?

A She made a lot of insinuating statements to me along the lines of a hot and cold game, you know, am I getting warmer or am I getting colder. She kept quizzing me on product names, code names, press releases, talking to different journalists, you know, The Wall Street Journal and other places. She knew an enormous amount of information

1604

and I was concerned about that.

Q My question, sir, specifically was if you didn't tell her that the press release was coming out the next day, do you have an understanding of how she knew about it on May 27th?

A No idea.

Q Did you tell other press reporters, such as The Wall Street Journal, in advance that this press release was forthcoming?

A The only people that we spoke with -- we, meaning myself and Harry Shuster, who was the PR representative for The Wall Street Journal.

Q At least one element of the press, The Wall Street Journal, did know that the press release was forthcoming?

A Yes. That's typical in our business is to alert the press the evening before.

Q Sir, what is your testimony as when you first learned that May 28th, 2003 was also the date of a SCO earnings release?

A After the release.

Q How long after?

A A day or two. I'm not sure.

Q You are not sure?

A It was after the release. I was not aware.

Q In fact, sir, didn't you learn that very day, that you

1605

knew of it that very day, May 28th, 2003?

A That day, after we had done our release, it was fairly in the public.

Q Well, let's talk about that. May 28th, 2003 -- I'll put a red circle on -- that's when Novell put out one of these press releases. May 28th, 2003 you acknowledge, the same day that press release was issued by Novell, you did learn that day that SCO had issued a press release on its earnings, right?

A Later in that day.

Q How did that come to your attention?

A Through the press.

Q Well, can you be more specific as to how that came to your attention on May 28th, 2003?

A Reading it in the press headlines on line on the Internet.

Q Sir, were you aware that on May 14th that SCO had announced that on May 28th it would be announcing its earnings?

A No.

Q I would like to show you what has been marked as Exhibit M-14 and admitted into evidence. This is a press release on May 14, 2003. Can you see that indicates under conference call, the company will host a conference call at 9:00 a.m. Mountain

1606

Daylight Time. You were in Boston -- working in Boston for Novell; is that correct?

A Back and forth, actually, between Provo and Boston. Most of the time I was in Provo.

Q The headquarters of the company were in Boston, Massachusetts?

A That's correct.

Q And the press release was released by SCO at 9:00 a.m. Mountain Daylight Time, correct?

MR. ACKER: Objection, calls for speculation, Your Honor.

BY MR. SINGER:

Q The document suggests that it will be -- that a conference will be held at 9:00 a.m Mountain Daylight Time on May 28th, 2003 to discuss second quarter fiscal 2003 results. Do you see that?

A I see that.

Q So would you agree with me that it was public information that SCO would issue its earnings releases and have a press conference on the 28th day of May?

A Yes, that's what it says.

Q But it is your position that you are announcing your press release regarding the ownership of the copyrights in UNIX which is coincidentally on that same day?

A That's correct.

1607

Q Just a coincidence. I would like you to take a look at the June 6th press release, Exhibit 97. Let's take a look at the statement in the press release. I will give a hard copy, but I think this one is large enough to read on the screen.

A It is, but thank you.

Q You also -- well, sir, let's take a look at the press release. Do you recognize this to be a press release issued by Novell eight days after May 28th, on June 6th, 2003, correct?

A Yes.

Q In this press release Novell states the following -- in fact, can you read it out loud, first paragraph of the press release?

A 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, which clearly remain with Novell.

1608

Q You approved this press release before it was issued by Novell on June 6th, 2003?

A Yes. I was part of the team.

Q And at this time you had -- by this time, on June 6th when this was released, you had seen a signed copy of Amendment No. 2, correct?

A That is correct. I saw it the day before.

Q And would you agree with me that the content of this press release is accurate?

A Yes, it is.

Q In fact, you would not have written it any differently?

A No. It's very clear.

Q And, in fact, you, sometime shortly after the events in question here, created a memorandum that discussed these events, for internal use, correct?

A Yes.

MR. SINGER: And I would like to mark a redacted copy of that.

THE COURT: What is this marked as?

MR. SINGER: E-32.

BY MR. SINGER:

Q Is E-32 a memorandum that you created?

A Well, there's a lot of blank pages.

Q I can show you the unmarked copy if you need that in order to assist you in your identification.

1609

A It appears to be part of my notes, yes.

Q And were these notes which you made for the purpose of documenting closer to the time in question what you thought about certain events?

A It appeared -- I'm sorry. It was not what appeared. It was exactly the events as they took place.

MR. SINGER: I move the admission of the redacted version of Exhibit E-32.

MR. ACKER: We object to the redactions. We will be seeking the admission of the entire document, Your Honor.

MR. SINGER: Your Honor, we can talk about the entire document. I'm using it for one purpose.

THE COURT: You may go ahead. I will accept E-32 in the redacted portion and rule on the issue of what it will actually look like when it goes to the jury later.

(Defendant's Exhibit E-32 was received into evidence.)

BY MR. SINGER:

Q Sir, if you turn to the last page, you wrote, quote, Novell -- June 6th -- responds that Amendment 2 does, in fact, appear to give some copyright ownership, but not patents, correct?

A Correct.

Q That's a true statement, correct?

A It's a true statement.

1610

Q Now later did you take the position that Amendment 2 clearly means that SCO doesn't own any copyrights?

A Yes, I did.

Q Even though in your internal statement you stated, Novell responds that Amendment 2 does, in fact, appear to give some copyright ownership, but not patents; is that correct?

A That is correct.

Q I would like to talk a little bit about your relationship with IBM. IBM and Novell had a long term business relationship as of 2003, correct?

A That's correct.

Q And, in fact, in 2003, Novell and IBM worked together to promote Linux; is that right?

A That's right.

Q You attended a meeting in spring '93 with IBM?

A I probably attended many meetings with IBM.

Q Do you recall a specific meeting that you attended with Mr. Messman, your chairman, together with Jim Stallings of IBM and Bill Zeitler of IBM?

A Yes. We had a number of meetings.

Q Mr. Stallings was in charge of IBM's Linux business; is that correct?

A That's correct.

Q You were, would it be fair to say, one of the leading

1611

advocates of Linux inside Novell?

A That's correct.

Q Bill Zeitler was also a senior IBM officer in charge of all hardware and certain software; is that correct?

A That's correct.

Q That meeting was in IBM's headquarters in Armonk, right?

A That's right.

Q That was a discussion of Novell's relationship with IBM?

A That's right.

Q And part of your relationship building with IBM?

A That's correct.

Q In June of 2003, are you aware that Novell sought to waive rights that SCO was seeking to exercise regarding IBM's misuse of UNIX technology?

A Yes.

Q Did IBM request Novell to do so?

A Not at all.

Q Is it your testimony that no one from IBM had any conversation with anyone from Novell prior to the exercise of that waiver?

A We acted on our own. No input from IBM at all.

Q How did you happen to be aware of the fact that IBM had received a notice from SCO seeking to terminate its AIX

1612

license?

A It's publicly known.

Q And were you aware that there were conversations going on between IBM and SCO at that point?

A Not at all.

Q Now what consideration did you give to SCO's business interests in connection with exercising that waiver of their rights against IBM?

A We were concerned more about the industry. We were concerned more about Novell support for Linux and support for the open source movement, if you will.

Q You gave no consideration to SCO's interest; is that right?

A No.

Q In fact, by waiving those rights, you were trying to prevent the courts from resolving that issue itself, correct?

A Not at all.

Q Sir, if you hadn't waived your rights, ultimately a court would decide whether or not IBM had violated those rights on the merits, correct?

MR. ACKER: Objection, calls for speculation, Your Honor.

THE COURT: Sustained. //

1613

BY MR. SINGER:

Q Sir, were you aware whether or not there was a lawsuit pending between SCO and IBM as of June of 2003?

A It was very public, yes.

Q Did Novell, through the waiver in June 2003 as well as subsequent waivers, take steps to try to prevent SCO from exercising rights under its software development agreements with IBM?

A That's correct.

Q And you understood that if you did nothing, IBM could defend itself in court, were able to do so, correct?

MR. ACKER: Objection, calls for speculation as to what IBM can and cannot do.

THE COURT: I'll overrule this objection.

BY MR. SINGER:

Q Mr. Stone, can IBM defend itself in court?

A That's up to IBM. I would imagine they probably could.

Q And if IBM's position was correct, they would have a court to determine it. If SCO's position was correct, then the court could determine that as well, correct?

A I would imagine so.

Q You tried to shortcut that process by Novell going in to waive SCO's rights under these agreements against IBM; is that right?

A No, that's not right. We were not trying to shortcut

1614

any process. We were concerned about Novell and Linux and the open source movement in the industry, and this was damaging to that process.

Q Sir, at the time --

THE COURT: Excuse me, Mr. Singer.

Mr. Acker, do you want to sit down?

Are you through with the chart, Mr. Singer?

MR. SINGER: I'm going to be going back to the chart, but I'll let you know when I'm doing that.

MR. ACKER: I'll stand, Your Honor.

BY MR. SINGER:

Q Now in August and October of 2003, are you aware that Novell exercised other waiver claims or sought to claim it could waive other rights that SCO had against IBM? Are you aware of that?

A I was aware of that.

Q I would like to show you Exhibit 413, October -- 691.

MR. SINGER: Why don't we start with 243, Exhibit 243, and can we expand this letter.

BY MR. SINGER:

Q This is a letter from Mr. LaSala. Had you approved this letter before it was sent?

A No.

Q Did you subsequently learn that Mr. LaSala was demanding that SCO drop certain claims against IBM?

1615

A I was aware.

Q And are you aware that after this occurred, SCO did not do so?

A That's correct.

Q And that Novell sought to waive those claims for SCO?

A Yes.

THE COURT: Are you going to offer --

MR. SINGER: I will offer Exhibit 243.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 243 was received into evidence.)

BY MR. SINGER:

Q So this was October 7th of 2003. Are you aware that on November of 2003, Novell bought a UNIX company called SuSE Linux?

A Yes.

Q If fact, you were very instrumental in that transaction, correct?

A Yes, yes, I was.

Q You paid over $200 million for SuSE Linux; is that correct?

A That's correct.

Q I would like you to take a look at Exhibit 260. Do you recognize Exhibit 260 to be an announcement, press release

1616

of Novell's agreement to acquire a leading enterprise Linux technology company called SuSE Linux?

A Yes.

Q By enterprise Linux technology, did you mean to refer to a Linux business that would work with corporations?

A That is correct.

Q If we turn to the first paragraph --

MR. SINGER: I move the admission of Exhibit 260.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 260 was received into evidence.)

BY MR. SINGER:

Q And in the first paragraph it says, Novell expands its open source commitment and will become the first offer comprehensive Linux solutions for the enterprise from and desktop to the server. Do you see that?

A I do.

Q And do you see in the third paragraph --

MR. SINGER: One paragraph below that, Mr. Calvin.

BY MR. SINGER:

Q -- Novell today also announced that IBM intends to make a $50 million investment in Novell convertible preferred stock? That was announced exactly at the same time, correct?

1617

A That's correct.

Q And that commitment was subsequently funded when the transaction closed in early 2004?

A That's correct.

Q Now I would like to go back for a moment to June of 2003. We're at June 6th where you had a public press release. We have seen that later in June -- you had the IBM waiver on July 9th and July 12th. Does that sound right to you?

A Sounds right.

Q I'll mark those in blue. We just looked at October 7th. And then November 14th that we were just looking at; is that correct?

MR. ACKER: You took the exhibit down.

THE WITNESS: It's not on the screen.

BY MR. SINGER:

Q And back in June there was another statement by Mr. LaSala with respect to copyright ownership issued on June 26th, Exhibit 103, correct? Take a look at that, sir.

MR. ACKER: I think he should be able to see the exhibit, Your Honor.

THE COURT: Yes.

MR. SINGER: I will give you a copy of that.

THE WITNESS: Thank you.

1618

BY MR. SINGER:

Q Exhibit 103. And are you familiar with this document?

A Yes, I've seen it.

Q It's a letter where Novell made further assertions with respect to the ownership of the UNIX copyrights, correct?

A Correct.

Q This was not publicly released at that time, was it?

A I'm not aware of that.

Q Are you aware of a letter of August 4th, which I'll show you, which Mr. LaSala wrote, Exhibit 105?

A Thank you.

Q This is already in evidence. Do you understand that the letter Mr. LaSala wrote on August 4th also made assertions of Novell's claims regarding UNIX copyrights, correct?

A Yes, that's correct.

Q Were you aware this wasn't also publicly released on August 4th, 2003?

A I'm not sure.

Q So we have June 26th, that isn't publicly released. You are not aware of any public release at the time, August 4th, of this letter, are you?

A No, I'm not aware of any -- at this point I'm not involved in approval or participating in any of these letter writings.

1619

Q And are you aware that in September and October 2003 Novell sought to register UNIX copyrights with the U.S. Copyright Office?

A I'm aware.

Q You are aware of that?

A I learned it, but I was not involved in that.

Q You were not aware at the time of that?

A Nope.

Q I would like to show you Exhibit F-21.

A Thank you.

Q Mr. LaSala, have you subsequently seen that these copyright registrations that Novell obtained with respect to certain UNIX copyrights?

MR. ACKER: I actually think he misspoke and called Mr. Stone Mr. LaSala.

BY MR. SINGER:

Q Mr. Stone, I apologize. Mr. Stone, do you recognize that these are copyright registrations that Novell obtained in August, September, October 2003?

MR. ACKER: Calls for speculation. He gave his prior testimony.

MR. SINGER: He may have seen these later and perhaps recognized them.

THE COURT: Ask him.

1620

THE WITNESS: I've never reviewed or read these. I appreciate the upgrade to Mr. LaSala.

BY MR. SINGER:

Q You were aware at the time, though, that copyrights were being sought, or was that done without your knowledge?

A I was not participating in any of this. At this point I was actually trying to build products.

Q Did you know whether or not Novell made a public statement at the time in September or October 2003 that it obtained certain copyrights?

A I'm not aware. Again, I was not participating in any of these issues at this point. I was more interested in building products.

Q I would like you to take a look at the December 22, 2003 press release, which is Exhibit 517.

MR. SINGER: This is already in evidence. I think you have copies of it.

BY MR. SINGER:

Q Can you see this sufficiently?

A I can.

Q Will you read this press release out loud, please?

A Sure. Novell believes it owns the copyrights in UNIX, and has applied for and received copyright registrations pertaining to UNIX consistent with that position. Novell detailed the basis for its ownership position in

1621

correspondence with SCO. Copies of our correspondence, and SCO's reply, are available here. Contrary to SCO's public statements, as demonstrated by this correspondence, SCO has been well aware that Novell continues to assert ownership of the UNIX copyrights.

Q Were you aware at the time that this was a press release that Novell put out publicly on December 22, 2003?

A Yes.

Q You, as vice chairman, approved this press release, correct?

A I did not approve this one. I got to read them, but I did not approve this one.

Q You were aware that this was being issued as an official statement?

A Yes.

Q And the correspondence which SCO referred to occurred in earlier dates, which we've been discussing, the June 26th letter, the August 4th letter, correct?

A That's correct.

Q And as we have seen, December 22, 2003, I asked you to assume, and you had not disagreed, was also the day of the SCO earnings release, correct?

MR. ACKER: Calls for speculation, Your Honor.

MR. SINGER: I would like him to assume that that is, in fact, the date of SCO's earnings release, okay.

1622

MR. ACKER: He's not an expert. I don't why he would be given a hypothetical question.

MR. SINGER: Well, he can look at the press release.

BY MR. SINGER:

Q Look at A-24.

MR. SINGER: I believe A-24 is in evidence.

THE COURT: It is.

BY MR. SINGER:

Q Were you aware, Mr. Stone, that on December 22nd, 2003, SCO Group was announcing its earnings for the third quarter and for the year?

A Not at all.

Q Do you agree, if you look at this press release, that that, in fact, was what occurred on December 22nd, 2003, that was the day SCO released earnings?

A Looks to be, yeah.

Q We don't have to assume anymore. We see that's the case. Now December 22, 2003 is also the day that Novell publicly again asserts ownership of the UNIX copyrights, correct?

A That's correct.

Q And is it your position that the fact that occurred on December 22, 2003 is also a coincidence?

1623

A Yes.

MR. SINGER: Nothing further.

THE COURT: Mr. Acker, will you be using the calendar?

MR. ACKER: No, Your Honor. I'm going to muddle through without it.

MR. SINGER: Actually, Your Honor, I did have one or two more questions. If I may reopen my direct?

THE COURT: Go ahead.

BY MR. SINGER:

Q Mr. Stone, you subsequently left Novell in 2004; is that correct?

A That's correct.

Q Were you asked to leave?

A Yes, I was.

Q You were given a severance package?

A Yes, I was.

Q You were given a contract that had -- you had a contract that had continuing obligations to the company?

A No obligations.

Q Well, you had a noncompete agreement?

A Excuse me. Yes, I have a noncompete.

Q You have provisions regarding cooperation with the company?

A Yes, I do.

1624

Q How much was the amount of the payment that you received at the time of your severance?

A Over a period of time, it equated to $2 million.

MR. SINGER: Thank you very much.

CROSS-EXAMINATION

BY MR. ACKER:

Q Good morning, Mr. Stone.

A Good morning.

Q Let me ask you about the speech you gave in March of 2004. Could you first tell the ladies and gentlemen of the jury what the open source business conference was, what sort of gathering that was?

A Sure. It was a gathering of business people, not technical people, in the open -- interested in open source computing. It was becoming a very popular way of writing software and developing software applications and software services. And it was the first conference of its kind to try to support the notion this was a good thing, and that it was a direction that the industry was heading in. And we had quite a good turnout. It was mainly business people.

Q What was the nature, what was the theme of your speech?

A The theme of my speech was very much to move -- to not be afraid of moving towards supporting the open source technology movement, and that older operating systems and development environments were closed and this provided a

1625

much more open and freer model of developing software applications.

Q Between May 12th of 2003 up until this conference in March of 2004, was the issue of SCO's assertion that there was UNIX in Linux and SCO's attempt to obtain licenses on that theory, was that something that was prevalent in the software community?

A It was the headlines every single day.

Q Did it impact your business or the business you were running at Novell?

A Yes, it did.

Q How so?

A It was clearly a distraction. It was affecting our ability to promote Linux in the open source movement as a development model, as a business for Novell going forward. I was very concerned that this was harming Novell's future business.

Q I'm going to show you a clip again of your speech, the tail end of your speech, and I'm going to show you the whole tail end of your speech as opposed to what the plaintiff's counsel has shown to you.

MR. ACKER: If we could do that, Mr. Lee.

(Videotape played)

BY MR. ACKER:

Q Do you still believe each of those statements to be

1626

true today?

A Absolutely.

Q What was the basis for your belief that there is no UNIX in Linux?

A I actually reviewed it.

MR. SINGER: Your Honor, I think he claimed attorney/client privilege on this statement later in this deposition.

MR. ACKER: I don't believe so, Your Honor.

THE COURT: Let's pause for a moment, please.

Do you have something I can be looking at, Mr. Singer?

MR. SINGER: This would be in his deposition.

THE COURT: All right.

If you find it, I want you to show it to Mr. Acker before you say anything more about it.

MR. SINGER: Yes.

Also show a copy of the transcript to the Court.

Page 68, line 16 -- and 15, through page 69, line 11.

THE COURT: You don't need to show me, Mr. Singer.

Let me ask Mr. Acker if he wishes to respond.

MR. ACKER: I will move on, Your Honor.

THE COURT: All right. //

1627

BY MR. ACKER:

Q Let's step back so the ladies and gentlemen --

THE COURT: Mr. Acker, excuse me.

Mr. Singer, I need to ask whether or not you want me to ask the jury to disregard the question and the answer?

MR. SINGER: I would like, if Your Honor would, to explain what just happened here with respect to the invocation of privilege at the deposition and disregard the answer.

THE COURT: Ladies and gentlemen, during the course of depositions, as you would have picked up, there are oftentimes objections made by the attorneys representing the parties for the other side during the course of the deposition. Apparently, in the deposition of Mr. Stone, questions of this sort were asked, an objection was made by his attorney saying that information is privileged because of attorney/client privilege. So for that reason, it would be inappropriate, since the privilege was requested during the deposition, it would be inappropriate for that testimony to now come before the jury.

Does that accurately reflect what happened?

MR. ACKER: Yes, Your Honor.

BY MR. ACKER:

Q Can we step back and can you tell the ladies and gentlemen of the jury, briefly, your educational background.

1628

A I have an undergraduate degree in computer science. I have what is called an IMT, an executive MBA from Harvard business school.

Q Now you explained two periods of time that you were at Novell. Can you explain for the ladies and gentlemen of the jury the first time you were at Novell and what your responsibilities were?

A Sure. I was at Novell in early 1997. My responsibilities were as a senior vice president. I was responsible for our corporate development technology direction, business development, support, developer services.

Q Who are was the CEO at that time when you were at Novell during the first period of time?

A Eric Schmidt.

Q Where is Mr. Schmidt now?

A He is the CEO and chairman of Google.

Q Did you leave Novell at some point during that first stint?

A Yes, I did.

Q When was that?

A 1999.

Q Why did you leave?

A About 400,000 miles a year. I was traveling far too much and I wanted to get my life back after working so hard.

1629

So I decided I wanted to do a startup company in Boston.

Q Then what did you do during the period of time after leaving Novell after the first stint and when you returned in 2002?

A I was running a software startup company in Boston.

Q What caused you to come back to Novell?

A I received a phone call from Jack Messman, who was then chairman of the company, and he asked me to come back.

Q How did you know Mr. Messman?

A He was on the board of directors since the beginning of the company.

Q During your first period of time at Novell, were you involved at all in the negotiation or execution of the asset purchase agreement or any of its amendments?

A I was never involved.

Q After coming back to Novell in 2002, when was your first recollection of issues arising with respect to Mr. McBride and SCO?

A In the later part of 2002, e-mails were coming in to people that worked for me as well as the legal department from Mr. McBride with respect to whether or not Novell wanted to participate in a campaign that they were putting together called the SCOsource.

Q At some point in time did you put together a document, E-32, that Mr. Singer showed to you that detailed your

1630

interactions with Mr. McBride?

A Yes, those are my notes.

Q Let me show you an unredacted copy.

A This is redacted.

Q If you could take a look at that and let the ladies and gentlemen of the jury know if you recognize it.

A Yes, these are my notes.

Q Were these notes -- when were these notes prepared, approximately?

A I prepared them in -- well, I had been preparing -- writing them all along, but I prepared the notes in early June.

MR. ACKER: We move for admission of the unredacted version of E-32, Your Honor.

MR. SINGER: We object to E-32 as hearsay, it's his notes, the one part that previously was an admission.

MR. ACKER: Well, he's here. He's subject to cross-examination. These are his notes prepared contemporaneous with the time of the events. I think they are admissible, Your Honor. At the very least he should be allowed to use them while testifying.

THE COURT: Counsel, I agree they are hearsay, so I will not permit the unredacted version to go the jury, but he may use those certainly to refresh his memory during the course of his testimony.

1631

MR. ACKER: Thank you, Your Honor.

BY MR. ACKER:

Q Do you remember the first time that you yourself had conversations with Mr. McBride?

A Yes I, do.

Q When was that?

A According to my notes --

MR. SINGER: Your Honor, I believe the appropriate procedure is for him to testify from his present recollection. If he doesn't have that, he may look at notes to refresh that recollection.

THE COURT: That is correct, Mr. Acker. It will not be as efficient, but I do believe that is the way to proceed.

BY MR. ACKER:

Q Do you have a memory without looking at your notes?

A Yes.

Q When was the first time you talked to Mr. McBride?

A It was in early March of 2003.

Q Who called whom?

A Mr. McBride called me with respect to a consortium called UnitedLinux.

Q What is UnitedLinux?

A It was a consortium of four companies that was promoting a version of Linux.

1632

Q Was SCO part of that consortium?

A Yes.

Q What was Novell's interest, if any, in that consortium?

A Novell was interested in participating in that consortium because it was supporting and operating an environment for a distribution called SuSE, which we later acquired.

Q Why was Novell interested in being part of UnitedLinux?

A It was part of our strategy to support the open source movement and support Linux going forward, and we saw that as a public and business mechanism for us to support that environment.

Q What was the substance of your conversation with Mr. McBride during this first call?

A Whether or not we would like to participate in that organization as a board member.

Q He was asking you that or vice versa, you were asking whether he would help you get --

A He was asking whether or not we would like to participate, and then in return for that he was looking for money, and then he was looking for us to give up our $8 million royalty stream, so he was negotiating.

Q What was your response?

A No.

Q Was there subsequent contacts with Mr. McBride in '02

1633

and '03 between yourself and him?

A Yes, there were other e-mails and phone calls.

Q When was the next contact, do you recall?

A I believe the next series of calls were in the April, May time frame. There was one I recall where we had a conversation with Mr. McBride, who was getting into a taxi in New York City. Mr. LaSala and I were in my office. Again, we were asking him what is going on with this whole SCOsource issue and copyrights and patents. He continued to ask us to, you know, if you could just clear up this issue, if you could just fix and address the copyrights and patents issue, it would be great. We asked him if we could see -- am I going on too long?

Q No. You're fine.

A We asked him if we could see the code he kept claiming was in Linux. And he asked me if I would meet with a gentleman named -- his chairman.

Q Who was that?

A A gentleman named Ralph Yarro.

Q How did you leave the call with Mr. McBride when he was in New York and you and Mr. LaSala were in Massachusetts?

A We left it primarily that I would meet -- that they would prepare a nondisclosure agreement and that I would meet with Mr. Yarro.

Q Did you have other conversations with Mr. McBride or

1634

Mr. Yarro after that?

A Yes. I met with Mr. Yarro, it was late May. It was in my office in Provo, Utah. Again, a relatively strange conversation. He came by asking the same questions that Mr. McBride was asking, if you just could take care of -- he was more explicit, if you could take care of this copyright issue. He also -- at that time he owed us $18 million.

Q What was Mr. Yarro's position at that point with respect to SCO?

A He was the chairman.

Q When you say he owed you $18 million, who owed Novell $18 million?

A SCO.

Q For what?

A If was an old lawsuit that had to do with a product called DR DOS. And we had won a case. They clearly owed us $18 million for a long period of time.

Q What did Mr. Yarro say to you?

A He was trying to negotiate a price concession.

Q What was your response?

A No.

Q Was there any other conversation between yourself and Mr. Yarro?

A He asked if I would like to meet with Darl -- with Mr. McBride and his team and review the code -- the offending

1635

code between UNIX and Linux, and I said absolutely.

Q Did that ever take place?

A No, that never took place.

Q Why not?

A Because we made a number of attempts -- this was in around May, I believe it was the 24th, we made a number of attempts to meet with Mr. McBride and his team. I asked for an NDA, I asked for it four or five times, the detail that we would be able to review the source code.

Q When you say NDA, what do you mean?

A A nondisclosure agreement that gave us the right to look at the source code. He had made -- he, meaning Mr. McBride, had made many public statements that they were going to show the offending code and never did. So I wanted a legal agreement allowing me to see it.

Q Was SCO or Mr. McBride willing to do that?

A He appeared to be, but I never received it.

Q So what happened?

A I canceled the meeting.

Q Now Mr. Singer asked you a number of questions -- let me back up. On May 12th, you are aware that Mr. McBride sent a letter to Mr. Messman as well as a thousand other companies across the United States with respect to the accusations of there being UNIX in Linux?

1636

A That is correct.

Q What was the response inside Novell as well as across the industry when that occurred?

A We were very concerned that he was damaging an industry and that it was hurting Novell's business.

Q Was there some -- was a decision made at Novell to respond to it?

A Yes.

Q What was that response to be?

A The decision was made to put up statements to the effect that Novell owns the copyrights and patents to UNIX.

Q Why did Novell do that?

A Enormous pressure. I was receiving no fewer than 250 e-mails a day on this topic, 30 to 35 phone calls from shareholders, from customers, from employees, from business partners, you know, Novell, why are you so quiet, why aren't you saying something. And I think we had reached a point that we believed it was time to state our case given that Mr. McBride, you know, was stating his.

Q Why was the press release put out on May 28th?

A That's when we were ready and done.

Q Did you have any knowledge that SCO's earnings release was set for that day?

A None whatsoever.

Q Did you speak with Ms. O'Gara the evening prior to May

1637

28th, on May 27th?

A Yes, I did.

Q What was the substance of that call?

A She kept quizzing me asking me questions about products, about press releases, about UNIX and Linux. As I said previously, she had an enormous amount of information that I was very concerned about. I told her nothing -- she played the hot and cold game. I told her nothing and that she had to call our PR representative, Mr. Shuster. She called me again the next morning, and I said nothing, please call Mr. Shuster.

Q Did you ever tell Ms. O'Gara that Novell was intentionally putting out its press release on May 28th to somehow impact SCO's earnings release?

A No, I did not.

Q After the press release went out on May 28th, how did you become aware of Amendment No. 2 to the APA?

A The signed Amendment No. 2 apparently went to The New York Times. I think it was sent to them by SCO, I'm not sure. I was aware of it the morning of June 5th.

Q Had you ever seen an executed copy of Amendment No. 2 before that?

A No.

Q After reviewing Amendment No. 2, did it change your mind as to whether or not copyrights had transferred from

1638

Novell to Santa Cruz in 1995?

A Not at all.

Q Mr. Singer asked you some questions about IBM. Were any of the actions that Novell took in 2003 or 2004 with respect to SCO motivated at all by something said or done by IBM?

A None whatsoever.

Q Was there any relationship between IBM's decision to purchase $50 million worth of Novell's stock and the actions that Novell took in 2003 and 2004 with respect to SCO?

A No.

Q Did you have a conversation with Mr. McBride in the last few months?

A Yes, I did.

Q Can you tell the ladies and gentlemen, first of all, what you do for a living, and the substance of that call?

A I am a venture capitalist here in Salt Lake City with Epic Ventures. It's affiliated with Zions Bank. He called me and asked me if I would be willing to invest in a new company he was working with.

Q Did that surprise you?

A Yes. I thought it was fairly strange. I had not talked to him in years. And he also said to me something I thought was odd is that, oh, don't worry about the Maureen O'Gara thing, it's not an issue. I said whatever. Thank

1639

you for calling.

Q Have you had any further conversations with Mr. McBride?

A No.

MR. ACKER: I don't have any other questions, Your Honor.

MR. SINGER: I just have a few, Your Honor.

THE COURT: Go ahead, Mr. Singer.

REDIRECT EXAMINATION

BY MR. SINGER:

Q Mr. Stone, you said you were ready to put out the press release on May 28th -- or you put out the press release on May 28th because that's when you were ready to do so, right?

A That's correct.

Q However, as of May 28th, you only had an unsigned copy of Amendment 2. You didn't know if it was signed, right?

A That's correct.

Q So you didn't wait past May 28th to see whether or not it was signed before putting out the press release, correct?

A That's correct.

Q In fact, you found out later that it had been signed, several days later when SCO sent it?

A That's correct.

Q And, in fact, if we look at that press release --

MR. SINGER: Can we bring back up the June 6th

1640

press release, Mr. Calvin.

BY MR. SINGER:

Q This is Exhibit 97. It says in the press release that 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. That turned out to be false, right?

A Apparently, yes.

Q In fact, at the time this was sent, you didn't tell the public that we had an unsigned version even on May 28th, right?

A That's true.

Q In fact, even the signed agreement turned out to be present in Novell's files on further inspection, correct?

A Apparently, yes.

Q Now let's talk about -- so you agree the statement is false, that to Novell's knowledge, this amendment is not present in Novell's files?

A I don't believe that's false.

Q You don't believe that's false. You don't believe anyone at Novell knew that it was in the files of an executive officer?

A I do not.

Q Now with respect to the issue regarding a conversation with Mr. McBride and UnitedLinux, I would like you to look

1641

at Exhibit 563, which I believe is in evidence. We blow up this document, which is an e-mail from Greg Jones --

MR. SINGER: Can I confirm that 563 is in evidence? That's what our notes reflect.

THE CLERK: It is not, no.

BY MR. SINGER:

Q Have you seen this before?

A Yes.

MR. SINGER: I move the admission of 563.

MR. ACKER: No objection.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 563 was received into evidence.)

BY MR. SINGER:

Q This is November 20th, 2002. Do you see the second paragraph of the letter -- of the e-mail?

A I do.

Q Mr. Jones is an attorney who works for Novell, correct?

A Correct.

Q Mr. Lundberg is an attorney who works for Novell, who is sitting at counsel table, correct?

A That's correct.

Q Mr. LaSala is an attorney who at the time worked for Novell; is that correct?

1642

A That's correct.

Q He says this is reflecting a conversation with Darl McBride, correct?

MR. ACKER: Your Honor, I'm going to object. It calls for speculation. Mr. Stone was not a part of the conversation. He's not copied on this e-mail.

MR. SINGER: The e-mail suggests that it's a conversation with Mr. McBride.

MR. ACKER: It calls for speculation. He's asking him about a document that he wasn't part of the conversation and he's not on the e-mail.

MR. SINGER: I can re-word the question.

THE COURT: Re-word the question.

BY MR. SINGER:

Q Since this is in evidence, I am just going to read to you part of the e-mail. Today Dave Wright and I -- the I would be Greg Jones, attorney for Novell -- spoke with Darl. He wants Novell documents that help give the history of SCO's rights to UNIX. Mr. Stone, that's consistent with what conversations you had with Mr. McBride where he asked not for a transfer to copyrights but something to clarify the ownership of the copyrights, correct?

A That's correct.

Q As far as you know, neither SCO nor Novell at this

1643

point had Amendment No. 2 in its possession -- or at least was aware of Amendment No. 2, correct?

A As far as I know.

Q He says he wants this information to support possible efforts by SCO to assert claims relating to infringing uses of SCO UNIX libraries by end users of Linux. Then you see it says, as Novell still receives more than $8 million each year from retained revenue streams for old versions of UNIX, Darl suggested that SCO's efforts may lead to Novell receiving greater revenues. Now is it your testimony, sir, that in the early part of 2003, Mr. McBride reversed course and said we don't want you to keep receiving any of this revenue? Is that your testimony?

A Yes.

Q Now Novell was not a member of UnitedLinux; is that correct?

A That's correct.

Q Novell wanted to become a member of UnitedLinux?

A That's correct.

Q You wanted Mr. McBride's assistance to become a member of UnitedLinux, correct?

A No. We actually wanted to take their place. He offered it.

Q You wanted to replace them?

1644

A There were four members.

Q Now with respect to the nondisclosure agreement, you were offered the opportunity to see information if a nondisclosure agreement was signed and at the last moment you canceled; is that correct?

A That's correct.

Q Mr. McBride was there waiting for you and you just decided to cancel; is that right?

A I wouldn't suggest he was there waiting for us. It was quite a number of hours before the meeting, but we never received the NDA.

Q To be exact, you received an NDA. You just didn't find the NDA to your liking; is that correct?

A That's true. It did not detail the ability to look at the source code.

Q Finally, with respect to Mr. Yarro, you said that $18 million was owed by SCO. That wasn't right, was it?

A Yes, it was right.

Q Wasn't it a company called Canopy that owed the $18 million?

A Yes. It was Canopy Group, which Ralph Yarro was chairman of.

Q But not SCO?

A Correct.

MR. SINGER: Nothing further.

1645

MR. ACKER: No questions, Your Honor.

THE COURT: Counsel, may this witness be excused?

MR. SINGER: We do not intend to re-call him.

MR. ACKER: Yes, Your Honor.

THE COURT: That means, Mr. Stone, you do not need to worry about being re-called as a witness. But I will instruct you do not discuss your testimony with any other witness in this case or in the presence of any other witness or communicate the content of your testimony to anyone else.

THE WITNESS: Yes, Your Honor.

THE COURT: Thank you, Mr. Stone.

THE WITNESS: Thank you.

THE COURT: How long will the deposition be?

MR. SINGER: Twenty minutes, Your Honor.

THE COURT: We probably ought to go ahead and take a recess before we go to the deposition.

Ms. Malley.

(Jury excused)

THE COURT: Counsel, let me make you aware of one thing. Because of the way this trial has unfolded, specifically the fact that plaintiffs will not rest until very late in the case, I'm going to request that your Rule 50 motion deal only with those issues that the jury will be asked to consider in the end and not those that will be dealt with by the Court subsequently by you making proposed

1646

findings of fact and conclusions of law. That way you will be able to focus more on the important issues that will have to be decided relatively quickly and the Court will be able to do the same.

Does that pose a problem for any of you?

MR. JACOBS: It does not, Your Honor. Actually, the way we understand the rule to work, we don't need to file a Rule 50 motion on bench issues in order to protect our rights.

THE COURT: I just wanted to make certain we're all clear on that.

Are you all right with that, Mr. Singer?

MR. SINGER: Yes, Your Honor. This would relate solely to, from our perspective, the slander of title claim that Novell has counterclaimed, Novell has brought.

MR. JACOBS: I'm sorry. Now I think I understand him. The jury issue for you is our slander of title claim?

MR. SINGER: Yes.

THE COURT: Is there anything before we recess?

MR. JACOBS: I did have a couple of other matters that could be dealt with now if you would like or --

THE COURT: Let's go ahead.

MR. JACOBS: You asked us about the jury instruction on the litigation privilege, and whether we were not going to seek such an instruction. I think we're in

1647

alignment with SCO on this, but it's worth stating it on the record and letting you know what we would be asking you to do.

We understand that SCO is not alleging that any statement made in the course of the litigation itself, whether by way of pleading or oral argument or any other litigation, specific comment is being alleged as part of their slander of title claim. In other words, what is the subject of their slander of title claim are statements made outside the course of the litigation, such as the May 28th press release, the December 22nd press release. On that understanding, we do not think the jury needs to be instructed on the litigation privilege. We would ask the Court to instruct the jury that what I just said is true, that is that statements made in the actual course of the litigation itself are not actionable, if you will, under a slander of title claim.

We understand SCO to be in agreement with the principal. I am not sure we're in agreement on the content of the instruction. But that's where we are today on the litigation privilege.

THE COURT: Mr. Normand.

MR. NORMAND: Your Honor, we are in agreement with the principal on the instruction as a I hear Mr. Jacobs articulated. I think what it's going to come down to is

1648

this evidence that Mr. Singer spoke to this morning about allegations in the complaint and subsequent Novell admissions in its answer, and argue that is relevant evidence on the issue of statements that we are claiming are slanderous.

So I would propose, on the run as I think about it, the first half of what Mr. Jacobs proposes is fine, or what he proposes would be the first half of the instruction, but I think the second half should be you are entitled to conclude from what have come in as admissions that certain statements were made in a slanderous context.

THE COURT: Why don't you two work out an instruction and get it to us sometime Monday, please.

MR. JACOBS: We will, Your Honor. Thank you.

The second topic is the topic I raised the other day, and this is the potential to augment the record on the issues before the bench. We've not reached an agreement with SCO on a mechanism or stipulation by which that would occur. So we're back to whatever motion we might make to Your Honor in that regard. It's something we couldn't reach agreement on.

THE COURT: Well, my inclination is just simply let these witnesses play out during the course of the trial.

MR. JACOBS: Thank you, Your Honor.

THE COURT: Anything else?

1649

MR. SINGER: Not from us.

THE COURT: We'll take 15 minutes.

(Recess)

***** Part 2 *****

THE COURT: Is there anything, Counsel?

MR. SINGER: Not from us, Your Honor.

MR. BRENNAN: Your Honor, we had conferred about the Ryan Tibbitts deposition. We have agreed that we can continue that discussion so we can give a description later.

THE COURT: Okay.

MR. BRENNAN: I want to let you know, we were working --

THE COURT: You have one more break, then.

MR. BRENNAN: Thank you.

THE COURT: Ms. Malley.

(Jury brought into the courtroom.)

THE COURT: Mr. Normand, is this your witness?

MR. NORMAND: Yes. We would call as the next witness, by video deposition, Maureen O'Gara, who was deposed on March 23, 2007.

THE COURT: Thank you.

(Designated portions of the deposition were played, as follows:)

Q. What do you do for a living?

A. I'm a journalist.

Q. And how long have you been a journalist?

A. Since about 1972.

Q. Do you cover a certain particular industry?

1650

A. Yes. I cover the computer industry.

Q. And how long have you been covering the computer industry?

A. Since 1972.

Q. Are you aware that Novell has issued an announcement claiming that Novell, and not SCO, owns the UNIX copyrights?

A. Yes.

Q. I'd like to now show you a document that will be marked as Exhibit 1080. It's a document that contains an article entitled Novell To Try To Shoot Down SCO IP Claims, by Maureen O'Gara.

Do you see that article within the document?

A. Yes, I do.

Q. And does that appear to be the document that we were just talking about in which you wrote about Novell's announcement about its alleged ownership of UNIX copyrights?

A. Yes.

Q. And what's the date of the article?

A. It's dated May 28.

Q. And, again, is that consistent with your recollection of the article and the announcement?

A. Yes.

MR. NORMAND: Your Honor, SCO moves into

1651

evidence Exhibit 172 based on the foundation that Ms. O'Gara just laid.

MR. HATCH: No objection, Your Honor.

THE COURT: It will be admitted.

(SCO Exhibit 172 received in evidence.)

MR. NORMAND: Mr. Calvin, could you put that up for the jurors.

And Mr. Calvin, Your Honor, has highlighted the language that Ms. O'Gara is going to be subsequently asked about.

Q. Before you published this article, did you speak with Novell?

A. Yes.

Q. Did you speak with someone named Chris Stone of Novell?

A. Yes.

Q. And what was Mr. Stone's position at Novell, if you knew at the time?

A. I believe he was vice-chairman.

Q. What did Mr. Stone tell you about Novell's public announcement in which he was going to assert its purported ownership of the UNIX copyrights?

A. Well, he informed me of the substance of what the story is about, that they were going to -- what is the right word -- assert their ownership.

1652

Q. Did he say -- did he say anything about the reasons why they were issuing that announcement on that date?

A. Yes, he did.

Q. And what did he say?

A. He said they were doing it because SCO's earnings were that day.

Q. And did he say anything about the effect, the intended effect of the announcement on that date?

A. The reason that they were doing it, as I understood it, was to confound SCO's stock positions.

Q. And when you say "confound SCO's stock position," can you be a little more specific or can you clarify in any way?

A. Well, I think the object of the game was to throw a monkey wrench into the works.

Q. Well, when you say that they were trying to confound or throw a monkey wrench, what -- can you explain that in some other way?

A. They were trying to upset, upset the stock price.

Q. And when you say "the stock price," whose stock price?

A. SCO's. I'm sorry. SCO's.

Q. Did Mr. Stone say anything about harming SCO?

1653

A. Logically, there wouldn't be any other reason.

Q. So, you -- you understood that to be the intent?

A. That's what I understood.

Q. Do you know if there is any reference to your conversation with Mr. Stone that we've been talking about in this article?

A. Yes, I do. In the one, two, the third paragraph.

Q. Okay.

A. And it begins, "The letter."

Q. Would you read -- you can go ahead and read that into the record.

A. Is that all right?

Q. Yeah.

A. "The letter which Novell is supposed to post to its website today, right before SCO reports its quarterly results-- "

Q. Can you continue?

A. "-- says that Novell owns the IP and that SCO merely shares in certain rights that it acquired from Novell by way of the original SCO, the old Santa Cruz Operation."

Q. And did you write that paragraph as part of

1654

this article?

A. Yes.

Q. Did he say anything more than SCO is supposed to report its quarterly results on May 28?

A. He led me to understand that the reason that they were doing it on the 28th, that they were posting their -- their cease-and-desist letter, was because SCO was -- had its earnings report.

Q. So, I understand you to be saying that he led you to understand something. But I need to --

A. He said --

Q. You're on to it. I'm trying to figure out what you --

A. Yeah --

Q. -- took away from it versus what he --

A. No --

Q. -- actually said to you.

A. No. There was no -- there was no lack of clarity. There was no lack of clarity, sir.

Q. Well, then, what was clear in exact -- in his words versus what you took away from it?

A. He was saying to me that the reason that they were doing this was because of SCO's -- SCO's earning report. I'm sorry. And I'm -- it's just -- that's just the way it is.

1655

Q. And so my question to you is, is it your testimony, under oath, that Mr. Stone conveyed to you, in words, that the reason Novell was doing this announcement on the 20 -- on the date it was doing it, was so it would be coincident with SCO's report of its quarterly results?

A. Yes.

Q. And what words or substance of the conversation do you precisely recall him using in order for him to convey that, as opposed to you to infer it?

A. Maybe it was the laughter that I remember most about it.

Q. All right. So tell me about that.

A. Well, he basically -- I guess the right -- maybe the right way to characterize it was chortled.

Q. And what do you recall of the chortling?

A. That was at the end of the -- our conversation. It was shortly after we, you know, we hung up. I think we had been on the phone for a little bit of time going through all this. And he explained to me -- and that's why it appears in this story, that the coincidence -- it appears in this story because he drew my attention to it.

Q. And did -- so, I think we have chortling at the end of the conversation. And we have --

A. About that. It wasn't, you know, like -- it was about, about the fact that they were putting out

1656

the -- their statement on that day. That was what the laughter was about.

Q. So, let me see if I have accurately captured the back and forth over the last few minutes.

A. Okay.

Q. One. Mr. Stone said to you, "We are releasing a statement about the ownership of the UNIX copyrights." Two. Mr. Stone drew your attention to the fact that SCO was reporting its quarterly results the next day. And, three, Mr. Stone chortled?

A. Okay. There is an absence of causality in there.

Q. You have put your finger on my question.

A. All right. And so the step that's left out is that there was a connection between these, step A and step B.

Q. And my question is, what did Mr. Stone say that specifically identified that connection, as opposed to you inferring from the --

A. I'm sorry. I'm not inferring, all right? I don't remember the exact words, but it wasn't an inference. It was a statement. And I would only be putting, you know, words in his mouth. I can't remember it, the exact words, but the meaning was quite clear. Chris Stone told me that they were going to drop this

1657

little bomb shell on SCO, and they were going to do it on the 28th of May because that was the day that SCO's numbers were coming out.

Q. And that's what you conveyed to SCO's counsel in the lobby of the hotel?

A. I think that that's, yes, an accurate statement, yes.

Q. You didn't use the word "bomb shell" with him?

A. No.

Q. And Mr. Stone didn't use the word "bomb shell" with you?

A. No.

Q. Bomb shell is your characterization today?

A. Right.

Q. Now, if you look at --

A. But that's what it was intended to be.

Q. That's the way you understood it?

A. No. That was the way the world was supposed to understand it because -- because it is a bomb shell, sir.

Q. And so my question for you is, when you think of this concept of causality, what do you have in mind as being the cause and the effect, as you understood it?

A. All right. Let me recount. My understanding

1658

is that -- no. Let me rephrase that. It's not my understanding. What happened was that Novell put out a statement saying that it owned UNIX. If it owned UNIX, then SCO didn't have a leg to stand on.

Q. Is it fair to say that you don't recall the specific words that Mr. Stone used when he talked about the causality, as you have been saying?

A. Right.

Q. But is it clear in your mind that he conveyed to you this notion of a causality?

A. Yes.

Q. And, specifically, that he conveyed to you that the reason for the timing of Novell's announcement was to impact, or as you said earlier, to upset the price of SCO's stock?

A. Yes.

MR. NORMAND: Your Honor, that completes SCO's Designations.

THE COURT: All right. Thank you.

Mr. Jacobs?

MR. JACOBS: Your Honor, Novell has some additional testimony of Ms. O'Gara.

THE COURT: All right.

(Whereupon further designations of Ms. Ogara's deposition were played as follows:)

1659

Q. Ms. O'Gara, do you have any notes of your conversation with Mr. Stone?

A. No.

Q. Is it your practice to take notes as you're talking with sources?

A. My notes are more in the way of just phrases.

Q. Phrases that people say to you?

A. Yeah.

Q. So you can capture the words they used?

A. Right.

Q. What do you recall of the exact words Mr. Stone used with you in reporting to you the planned announcement?

A. I can't.

Q. You saw no news value in a statement to you by a Novell executive that conveyed to you that the reason Novell was releasing its statement on a particular date was because SCO was reporting its quarterly results that same date?

A. I know that that seems, in isolation, like that should be really important, okay? But, there were so many issues in this very complicated matter, that that would make a great side bar or a followup, maybe, but we were talking about something else in this story, and I thought -- I didn't know where it was all going to go,

1660

and I've known Chris a long time. Sometimes I get protective.

Q. When you conferred with the public relations people at SCO; first of all, were you conferring with Blake Stowell?

A. Conferring? I don't confer with the PR people. I called Blake Stowell, yes.

Q. Well, that's, I guess, my question is, so, what -- why did you forward for this string of e-mails?

A. I have absolutely no --

Q. Let me finish -- let me finish my question. Why did you forward this string of e-mails from Frank Jalics, J-a-l-i-c-s, in which he accused you of being on -- in a nut shell, on SCO's side?

A. Yeah.

Q. Why did you forward that to SCO under an e-mail, "I want war pay."?

A. I don't remember the context of the thing, but --

Q. Do you remember why you forwarded it?

A. No.

Q. Does it strike you as peculiar that a journalist would forward to one of the sides in a dispute a string of e-mails she got from a reader?

A. I don't -- I don't know what the right answer

1661

to that question is because I don't know the context.

Q. Well, what's the context here?

A. I'm probably just complaining about getting this kind of crap, you know, all the time. People can't read and don't know what the heck is going on and got it wrong to begin with, just -- just, you know, saying that, you know, you think you've got it tough, Blake, you should see it from my side.

That's no big deal.

Q. And then you forwarded that string to Mr. Stowell with a, what I took to be a kind of a humorous remark, "I want war pay."

A. Right.

Q. And then Stowell says back to you, "Keep fighting the good fight."

A. Right.

Q. So, let me show you another e-mail. We'll mark this as 191. This is one that you would not have seen before but I think it's important that you see. So, if you look at your -- at the e-mail highlights of what looks to be an Adobe Acrobat attachment --

A. What do you mean e-mail highlight?

Q. Your e-mail highlights, "As against the backdrop of a thin IBM response to SCO's billion dollar suit against it, SCO claims it has found line-for-line

1662

plagiarism of SVR V in Linux and has renewed its threat to pull IBM's SVRX license in six weeks."

Do you see that?

A. This indicates to me that this is a list of headlines. In some -- some copies of our e-mail distributions, in the front they -- they have a list of the headlines. So, the first story -- these are different stories. 01 is a story with that headline. 02 is a story with that headline. I don't -- 03 and 04. Yeah. So what?

MR. JACOBS: Your Honor, at this point Novell would move to admit A-14.

THE COURT: Any objection?

MR. NORMAND: No objection, Your Honor.

THE COURT: It will be admitted.

(Novell Exhibit A-14 received in evidence.)

MR. JACOBS: And Mr. Lee has highlighted the portion of this e-mail that Ms. O'Gara will testify to next.

Q. Okay. So the lead story there is IBM Tries Non-defense Defense --

A. Yeah.

Q. -- Against Billion Dollar SCO Suit.

A. Yeah.

Q. And you send that to your readers, and Blake

1663

Stowell forwards it internally under an e-mail to Darl McBride, the CEO of SCO --

A. Yeah.

Q. -- which says, "Once again Maureen is coming through for us. We own the entire front page."

Do you see that?

A. Yeah. So what?

Q. So my question for you is, was Mr. Stowell working with you --

A. No.

Q. -- to get prominent coverage for the SCO/IBM lawsuit?

A. No. Absolutely not. Absolutely not. Never.

Q. So, this is an e-mail to you dated May 30, 2005, Exhibit 196 produced under SCO 1647696 to 697. Do you see that?

A. I don't see a date on it.

Q. Right at the top.

A. Oh, there it is.

Q. "I need you to send a jab PJ's way."

Do you see that?

A. Uh-huh.

Q. Who is PJ?

MR. JACOBS: Novell moves into evidence S-45, Your Honor.

1664

MR. NORMAND: No objection, Your Honor.

THE COURT: It will be admitted.

(Novell Exhibit S-45 received in evidence.)

A. PJ is the purported author of the Groklaw site.

Q. What is the Groklaw site?

A. It is a website that follows the SCO case -- I should say cases, maybe, but --

Q. And then you did, in fact, write a story about PJ or Pamela Jones, didn't you?

A. Yes.

Q. So, in 196, Stowell says in the subject line, "I need you to send a jab PJ's way," and that's March 30 2005?

A. Yeah.

Q. And 197 is your May 9 to 13, 2005 issue of Client Server News 2000, correct?

MR. JACOBS: Your Honor, Novell moves into evidence D-14.

MR. NORMAND: No objection, Your Honor.

THE COURT: It will be admitted.

(Novell Exhibit D-14 received in evidence.)

A. Yeah.

Q. And the lead story is Who is Pamela Jones?

A. Yeah.

1665

Q. Right?

A. Yes.

Q. Is there -- is there a causal relationship between Blake Stowell's e-mail to you and the appearance of the story in Client Server News 2000, May 9 to 13, 2005?

A. No.

Q. You did it independently? You did the story on PJ --

A. I have reason to do a story on Pamela Jones that has nothing to do with SCO.

Q. And, in your -- in that article you said, "A few weeks ago, I went looking for the elusive harridan who supposedly writes the Groklaw blog about the SCO v. IBM suit."

Do you see that?

A. Yes.

Q. What is a harridan?

A. I suppose I could look it up in the dictionary.

Q. Why did you use the word?

A. Because it's accurate.

Q. In what way is it accurate?

A. Have you read Groklaw?

Q. I'm sorry. I get to ask the questions.

1666

A. If you read Groklaw, you would know that harridan was the right word.

Q. Well, let's look --

A. There is a difference between a good word and the right word.

Q. Let's see if you agree with this definition. "Harridan. Noun. A woman regarded as scolding and vicious."

A. Hum.

Q. Is that why -- is that a definition that applies to your use of the word "harridan" in --

A. I think it's accurate.

Q. Scolding and vicious?

A. Uh-huh.

Q. As you sit here today, are you -- do you have any regrets over printing 197?

A. No.

Q. You don't have? Do you have any regrets about finding the identity -- reporting information, personal information about Pamela Jones?

A. No.

Q. And, again, "Who is Pamela Jones" had nothing to do -- the story on 197, your testimony is, it had nothing to do with Blake Stowell's March 30, 2005 e-mail with the subject "I need you to send you a jab PJ's way."

1667

A. I think he defines what the jab would be, which is something that we ignored, you know.

Q. The answer is?

A. No.

MR. JACOBS: That concludes our additional testimony.

THE COURT: All right. Thank you, Counsel.

Next witness?

MR. HATCH: Your Honor, we would call John Maciaszek.

THE COURT: All right.

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

MS. MALLEY: And if you would please state and spell your name for the Court.

THE WITNESS: John Maciaszek, spelled, M-a-c-i-a-s-z-e-k.

MS. MALLEY: Thank you.

DIRECT EXAMINATION

BY MR. HATCH:

Q. Good morning, Mr. Maciaszek.

A. Good morning.

1668

Q. I've got a little bit of a flu, so I hope you can hear me.

A. Well, I'm fighting a little bit of a cold myself, so we can commiserate.

Q. We'll all have it eventually.

Could you give us a brief description of your educational background.

A. Yes, I got a bachelor's degree in mathematics from St. Peter's College in Jersey City.

Q. What did you do after you graduated from college?

A. Well, simultaneously with graduation, I was commissioned in the U.S. Army and went in and served two years with the Headquarters XVIII Airborne Corp in Fort Bragg, North Carolina.

Q. Did you remain in the military?

A. Yes. After I got off of active duty, I served 20 years as a reservist and retired in 1987.

Q. Okay. Going back to when you got done with your active duty, did you then go into the workforce?

A. Yes. I was employed by AT&T Bell Laboratories in Holmdel, New Jersey.

Q. And at Bell Laboratories, what was your first job there?

A. I was a software developer.

1669

Q. Okay. And did you receive advancements during your time there?

A. Yes, I did.

Q. What did you end up -- the last job you had?

A. Well, I was a product manager and for parts of the microsystems business that AT&T was doing at that point in time.

Q. Okay. At some point, did you begin to work on the UNIX operating system?

A. Yes. In December, 1991, I transferred to USL, which was a fully separate subsidiary of AT&T at the time, and I became a product manager for UNIX products.

Q. Okay. What does a product manager do?

A. Well, I mean, a product manager is sort of like a -- I like to put it as sort of like an orchestra leader. The job is to ensure that all parts of the company, all the different aspects required to put a product into the marketplace, work together to make the product as good as it's going to be.

That includes working with engineering, working with sales, working with marketing, manufacturing, licensing and legal to get all the pieces together to bring the product to market. And, once it's out there, your job is to support the sales force as well and plan for future revisions of the product.

1670

Q. How long did you do that for AT&T's subsidiary USL?

A. Well, I did that until USL was acquired by Novell, I think it was in 1993, and subsequent to that I moved to SCO and then Caldera.

Q. Okay. When you went to Novell, did you physically move?

A. No. We stayed in the same location initially.

Q. And did your job change at all?

A. No, not in any way, shape or form.

Q. Okay. And when you went -- when Novell then sold the business to Santa Cruz Operation, did you change locations?

A. No.

Q. Did your job stay the same?

A. Essentially, yes.

Q. Okay. So, is it fair to say for most of the last 18 years, you have been working with the UNIX system?

A. That's correct.

Q. Now, at some -- when did you become aware of the sale of the UNIX business from Novell to Santa Cruz Operation?

A. Well, it was some time after the signing of the

1671

initial APA. We were notified. I think it was Mike Defazio who was in charge of the Novell UNIX business at that time and informed all the employees of the pending sale. This was prior to the closing date, obviously.

THE COURT: Mr. Maciaszek, could I get you to speak into the microphone a little bit more?

THE WITNESS: Sure.

THE COURT: Thank you.

THE WITNESS: Sorry.

Q. BY MR. HATCH: What did Mr. Defazio tell the workers at your shop about the sale?

A. Well, I mean, basically what he said was the entire business, UNIX business, was being transferred from Novell to SCO. SCO was purchasing the business.

Q. Did he say that -- did he say whether Novell was retaining anything from the business?

A. No. Our understanding was that the business was being transferred in its entirety to SCO.

Q. Okay. Now, was the business run any differently when you were under the umbrella of Novell than it was when you were under the umbrella of USL?

A. No. It was fundamentally the same.

Q. And so, at some point, did -- how did the transition happen from Novell to Santa Cruz?

A. Well, there were transition teams put together

1672

between the time of the initial signing and then, I think, through February of 1996, transition teams which included people from both Novell and SCO to ensure that the business moved in a very smooth and orderly way to SCO.

Q. Were you one of the Novell employees that was in charge -- involved in the transition?

A. Yes, I was.

Q. What was your responsibility?

A. Well, my fundamental responsibility was to bring to market the final product that was listed in the APA, UnixWare, 2.1, get the licenses done for that, as well as to interact with our OEM partners with respect to explaining to them what the new product was and facts about the actual purchase.

Q. Okay. Who appointed you to the transition team at Novell?

A. Honestly, I can't recall who it was. It might have been Sabbath, Steve Sabbath or somebody else. I'm not sure who the actual person was.

Q. Okay. Now, what -- specifically, what were you told to do as part of this transition team?

A. Well, we were told to bring the business completely under the control of SCO.

Q. Okay. Were you given statements of work?

1673

A. Yes. Each -- there must have been, I mean, 15 or 20 different transition teams, each of which put together a statement of work as to what items of work they were going to accomplish. I think the target date was February 1 to have it all completed, or certainly shortly there -- after the closing date, and those SOW's were put in detail as to what was going to be done and listed both who was on the team, that particular team, from both SCO and Novell.

Q. Okay. let me show you what's been marked as Exhibit 560. Is this one of the statement of works that you were talking about?

A. Yes. This one dealt with the licensing and contract management organization.

Q. And I notice that, on the second page, there is a letter here that mentions your name as well?

A. Yes. That's correct. I'm familiar with that letter.

MR. HATCH: Your Honor, I would move Exhibit 560.

MR. JACOBS: No objection, Your Honor.

THE COURT: Okay. It will be admitted.

(SCO Exhibit 560 received in evidence.)

Q. Mr. Maciaszek, the jury can now see this. It shows -- it says, SOW. Is that statement of work?

1674

A. That's correct.

Q. Okay. What's the period of time you said this is for?

A. From December 1, or the closing date, until the first of February.

Q. Okay . And what did you understand that period to be?

A. Well, that was the transition period. The intent is to have everything done by that time and that the transfer of employees would have occurred by the first of February.

Q. Okay. Again, you're a Novell employee at this time, right?

A. That is correct.

Q. Okay. Now, the second paragraph, you see where you it says: Act as SCO's worldwide agent for UnixWare and SVRX and any other Novell source code products being transferred to SCO.

Do you see that?

A. Yes, I do.

Q. Who is it referring to that's going to act as SCO's agent?

A. The Novell employees who are going to do the work.

Q. Okay. So your understanding was, who was

1675

acting as whose agent during this period?

A. Well, it was clear that the Novell employees were acting as agents of SCO at that point in time, given at the closing date all the assets were transferred to SCO.

Q. Okay. And, down in paragraph 2, responding to customers inquiries about the products and transfer of the ownership to SCO, was that consistent with what you understood was your responsibility as part of this transition team?

A. Absolutely.

Q. Okay. And by "transfer the ownership," what did that mean to you?

A. Well, all the asset and intellectual property were moving, and eventually selected people moved as well.

Q. Okay. And did you ever -- anybody from Novell, any of your bosses, ever tell you that there was some limitation on what was being transferred?

A. Absolutely not.

Q. Now, I notice for Novell, it was signed by a -- who is that that signed it?

A. Louis Ackerman, who was the manager of the contracts organization.

Q. Okay. Okay. Now, do you know what it means to

1676

mark a product with a copyright?

A. Yes.

Q. What does it mean?

A. Essentially what you're doing is identifying the fact that you are the owner of the product.

Q. Okay. Where is that put on the product?

A. Well, exteriorly, it would be as part of what I would call the skins of the product, since we are talking about -- if we're talking about shrink-wrapped product. It would be on the outside of the boxes, on the CD labels and also included in the software.

Q. Okay. So, as a Novell employee during this transition period, what were you told to do about marking the products?

A. Well, the products were to be marked for SCO's copyright. Pardon me.

Q. And that would include -- when you say "skin," what does that mean?

A. Well, it would be the boxes. If you go to a store, you buy a software box off the shelf, you look at the outside, it will have a copyright notice on it. If you look at the individual CD's you get as part of the product, it will have a copyright notice as well, identifying who the owner of the copyright is and what the effective dates are.

1677

Q. And you were instructed to do that by your bosses at Novell?

A. That's correct.

Q. Now, during this transition, did Novell take any other steps to notify its customers of the transfer of the business to SCO?

A. Well, certainly letters went out to all of the OEM customers that I am aware of, notifying them of the transfer of ownership from Novell to SCO.

Q. Okay. And were visits made as well?

A. Yes. As part of the transition, I participated in visits to the OEM customers, certainly the ones in Europe. I remember vividly making trips to ICL Olivetti and Siemens in Germany. So, we went out to make a visit to make sure they were aware of the fact that the transition was occurring

Q. Okay. And there were letters that were involved in that?

A. Absolutely correct.

MR. HATCH: I'd like to have -- like you to put Exhibit 592 on the screen.

Q. BY MR. HATCH: And 592 is a large group of letters which were introduced earlier. I'm just going to look at one of these. This is a letter -- who is this letter to?

1678

A. Siemens Nixdorf.

Q. All right. Have you seen this letter before?

A. Yes, I have.

Q. Okay. Was Siemens one of your clients?

A. Yes.

Q. Okay. During the entire time you were at Novell?

A. Well, I don't know the entire time, but certainly a goodly portion of the time I had responsibility for interactions with Siemens, yes.

Q. Okay. And did you have any dealings with Siemens during this transition period?

A. Yes. As I indicated, we made a visit to Siemens in Munich.

Q. Okay. In the letter --

Let's highlight the first paragraph, Mr. Calvin, if you would.

It says: As you may have heard, Novell has transferred to the Santa Cruz Operation, Inc., SCO, Novell's existing ownership in UNIX-based offerings and related products, collectively the transferred products.

Do you see that?

A. Yes, I do.

Q. Is that consistent with what you were told to tell the customers as part of the transition team for

1679

Novell?

A. Yes, it is.

Q. Now, these meetings -- well, let's see.

Let's go down also -- Mr. Calvin, could you highlight the "please direct" paragraph.

In the letter it also said:

Please direct all future correspondence regarding this matter to SCO at the following address.

Why did he do that?

A. Well, there was a lot of -- first of all, payments of royalties and other things needed to be -- we needed to notify them who the new receiving parties were going to be at SCO for any of that correspondence.

Q. Okay. Why would they -- why would you do that?

A. Because SCO is now the owner of the products, and all dealings have to go to SCO.

MR. HATCH: Okay, Mr. Calvin, would you highlight the signature line.

Q. BY MR. HATCH: And, just to be clear, this was a letter coming from Novell, correct?

A. Yes.

Q. You eventually -- did you eventually meet with the people at Siemens?

A. Yes, I did.

Q. Did you meet with them alone?

1680

A. No. There was a joint team, including both members of SCO as well as Novell and, at the time I made the visit, I believe -- I'm pretty sure I was still a Novell employee.

Q. Why were you taking SCO employees?

A. Well, SCO employees were being taken to introduce them to the OEM's and to establish with the OEM's the credibility of SCO which, compared to Novell and previous USL, was a smaller company, and introduce the engineering people, the salespeople that they were going to be dealing with going forward, to make sure that -- excuse me -- the customers were confident that we could continue, and I use the "we" in the sense, since I was part and parcel of the transition, could continue to carry on the business and the interactions as they were used to having it done.

Q. Okay. What was communicated to the customer, Siemens, in this case about the ownership?

A. Well, Siemens was informed, in concert with, you know, reiterating what we sent to them in the letters, that, in fact, SCO had acquired all ownership rights to the business.

Q. Okay. Now you met with other customers as well, correct?

A. That's correct.

1681

Q. Let me give you what's been marked as SCO Exhibit 751.

A. Yes.

Q. Are you familiar with this letter?

A. Yes, I am.

Q. Okay. This is a letter -- is this part of your transition as well?

A. Well, this came -- the original letter was, yes. The subsequent letter, signed by Mr. Murphy, was a followup to the original letter.

Q. Okay. Let's -- you were part of the -- the original letter you say is starting at page 2?

A. Yes. That's correct.

MR. HATCH: Your Honor, I would move admission of Exhibit 751.

MR. JACOBS: No objection, Your Honor.

THE COURT: It will be admitted.

(SCO Exhibit 751 received in evidence.)

Q. BY MR. HATCH: All right. Let's start on the second page. This is a January 29, 1996 letter to Tad Tung; is that right?

A. That's correct.

Q. This is similar to the letter we just saw with Siemens that went off early in the transition period?

A. Similar, yes.

1682

Q. And had similar language.

Just highlight the first few lines in the "this is to inform" paragraph, Mr. Calvin, if you would, please. Just do the whole paragraph.

It says:

This is to inform that you with respect to each of the Novell offerings listed on Attachment A, for which you are currently licensed, Novell's right as licensor under such agreements have been assigned to the Santa Cruz Operation.

Do you see that?

A. Yes, I do, basically telling them that the business had transferred.

Q. Okay. Now, you had indicated --

Let's go two back to the first page. This is a letter also to Tad Tung. If we could go to the date June 19, 1996, so about five months later, correct?

A. That's correct.

Q. Why were you having further communications with Tad Tung?

A. Well, my understanding is that Tad Tung -- the original letter was something that Tad Tung needed clarification on for their own purposes. I'm not sure what their legal rationale was, but they needed something that was signed by all parties.

1683

Q. Okay. They wanted both sides to admit that this had happened?

A. That's correct.

Q. Okay. And if we go down, let's see, the first line it says:

As you are aware, the ownership of the UNIX operating system has been transferred from Novell, Inc. to the Santa Cruz Operation.

Do you see that?

A. Yes.

Q. All right. And that was consistent with what the communications you were having with the customers?

A. Oh, absolutely, and it's consistent with the original letter that was sent to Tad Tung in January.

Q. I hate to have to ask this, but was there any limitation ever?

A. No.

Q. Their only concern was that they wanted to make sure both sides were agreeing?

A. That's correct.

MR. HATCH: All right. If we can go down to the signature page, Mr. Calvin, if you would, or the signature line

Q. BY MR. HATCH: It was signed by who for Santa Cruz?

1684

A. That was Bill Murphy, who had been with Novell and had transferred to Santa Cruz in the contract organization.

Q. Okay. And by Novell?

A. Cindy Lamont, who was also part of the -- originally part of the contract organization and stayed with Novell.

Q. Okay. And was your understanding that this was sufficient for Tad Tung?

A. Absolutely. Yes. Tad Tung countersigned it.

Q. Now, these customers you were visiting, what kind of customers were they?

A. Well, they were OEM's. That's original equipment manufacturers is what that abbreviation stands for. Fundamentally what they were is they were source code licensees who had the rights to make derivative works of UNIX code and begin shipping those products themselves. By making a derivative work, they sort of customized it to operate most efficiently on their hardware systems, which they sold the two together.

Q. What rights did an OEM customer typically get?

A. The got the right to make derivative works and to --

Q. Just stop there. What does that mean, to make a derivative work?

1685

A. Well, it means to take the original source code, the original source code that we delivered as part of their license, and make modifications to that code to customize it for their own use on their own hardware.

Q. Okay. What other rights did they get?

A. They had the right also to make distribution of the resulting product that they created and to -- obviously, as part and parcel of that, they paid royalties for the privilege of doing that.

Q. Okay. Now, what mechanism did Novell, later SCO, use to grant these OEM manufacturers those rights?

A. Well, there were multiple agreements involved, from the source code agreement which covered some generalized terms and conditions, through the actual product license, which would be specific to a particular release of UNIX or UnixWare, coupled with the distribution agreement which allowed them the right to distribute and had some terms and conditions in there like some of the discount schedules.

Q. What were the form of those types of agreements?

A. I'm not sure what you mean.

Q. Were they license agreements?

A. Yes. They were all license agreements.

Q. If you weren't able to license to the OEM's the

1686

right, to give them the rights you talked about, would you have a viable business?

A. No. You wouldn't be able to carry out that business.

Q. And what do you have to have to be able to grant those rights?

A. You have to have ownership.

MR. JACOBS: Objection, Your Honor, lacks foundation, calls for a legal conclusion, and speculation.

THE COURT: Rephrase the question, please.

Q. BY MR. HATCH: You have to have a license to be able to -- the license gives them these rights, as you understand?

A. That's correct.

Q. And do you have an understanding of what you need to be able to have the ability to give a license to a client?

A. Well, you need to own -- you need to own the code, and you need to have the copyrights associated with it. That's certainly the way I understand it.

Q. So your understanding is the copyrights are required to operate SCO's business?

A. Yes.

MR. JACOBS: Same objection, Your Honor.

1687

THE COURT: Overruled.

Q. BY MR. HATCH: Now, after the business was sold from -- and the transition was done from Novell to SCO, how did the agreements that the business used with its customers change from the way they were when they were at Novell?

A. They were identical, save the change in name. In other words -- as a matter of fact, if you look back at one of the things that you asked me to look at earlier, it specifically says that we should be doing it that way; namely, you take the existing contracts that Novell was using, and if you're using Word or some other software product, you do a global change of Novell to SCO and substitute the appropriate addresses. And those were the agreements that we used.

Q. Do you have an understanding why you would use the same agreements?

A. Well, it was multiple, but the main reason was we ensured that the business was carried on in exactly the same methodology, that the customers who we were doing business with understood the licenses and were comfortable that they understood we were doing the business in exactly the same way. And this avoided the need to go out and do all new contracts.

Q. You were giving them the same rights as you did

1688

when it was Novell?

A. Yes.

Q. And expecting the same payments?

A. Yes.

Q. All right. Now, at some point, in 1996, did you become aware that IBM was trying to buy out of its contractual royalty obligations to SCO?

A. Yes, I did.

Q. How did you become aware of that?

A. I received a phone call. It was either in late March or early April, I don't recall which, but a phone call from Larry Buffard who was a salesman with Novell, responsible for various customers.

Q. Okay. So, at this point, you had transitioned over to SCO?

A. That is correct. I was in SCO at the time.

Q. All right. What did Mr. Buffard tell you?

A. Well Larry, who I had known since USL days, basically said that they wanted to do a buyout of the IBM royalties for SVR 3.2 and some other modifications to their agreement.

Q. How did you respond to that?

A. I responded in a negative way, saying I didn't think, number 1, they had the right to tell us to do that; number 2, that I don't think our management would

1689

go along with this. And I immediately escalated and requested that Larry send me a formal letter request as to exactly what he wanted done.

Q. Okay. Let me give you a copy of what's been marked as Exhibit 67. Do you recognize this letter, Mr. Maciaszek?

A. Yes, I do.

Q. Okay. What is it?

A. It's the formalized request backing up his phone call to me, laying out more detail of the terms and conditions that they were looking for us to do as part of a letter agreement.

MR. HATCH: Okay. Your Honor, I'd move for admission of Exhibit 67.

MR. JACOBS: No objection, Your Honor.

THE COURT: It will be admitted.

(SCO Exhibit 67 received in evidence.)

Q. So, did you -- so, what did Mr. Buffard say in the letter? Was it consistent with the phone call?

A. Yes. It just expanded on the details, laid out what the amount of money was going to be for the buyout and detailed what kind of source code changes that he was looking to have done.

Q. All right. Did you take issue with what he was requesting to do with IBM?

1690

A. Well, yes, from multiple levels. I mean, first of all, a buyout of any kind at that point would fly in the face of a strategic direction of the APA, which was, in effect, to get customers who were on SVR 3.2 and earlier or later releases to move to UnixWare. A customer with a buyout would be not very readily disposed to making a transition, number 1. Number 2, he was asking us to modify source code rights, which we fundamentally objected to. The bulk of that revenue belonged to us. Number 3, the pricing he was asking for, in my opinion, was ridiculously low.

Q. Okay. Who responded to Mr. Buffard's letter?

A. Well, I escalated that up through my chain of management, and I believe that a look and/or Scott McGreggor were involved in the process of response.

Q. All right. You continued to be involved in this issue, though; is that correct?

A. Yes. That's correct.

Q. Let me show you what has been marked as Exhibit 179. Do you recognize this letter?

A. Yes.

Q. Is this a letter that was worked on by your team at SCO to respond to Mr. Buffard's letter?

A. Yes. This was addressed directly to Mr. Frankenberg, who was obviously the top man at

1691

Novell.

MR. HATCH: Okay. I'd move admission of Exhibit 179 Your Honor.

MR. JACOBS: No objection.

THE COURT: It will be admitted.

(SCO Exhibit 179 received in evidence.)

Q. BY MR. HATCH: The ultimate letter 179 that we are seeing --

If you go to the second page to the signature block, Mr. Calvin.

-- this was sent by Mr. Mohan who, it says here, is president and chief executive officer of SCO; is that correct?

A. That is correct.

Q. And what did you understand was the response going back to Novell?

A. Well, essentially saying this was not something we thought should be done and objecting to even the thought of doing it.

Q. Did Mr. -- did the letter indicate that -- the issue you raised about paid up licenses?

A. I believe it did.

Q. Okay. And did it -- were you --

A. It was consistent, I believe, with my view of what the impact would be on customers moving to

1692

UnixWare.

Q. Okay. And did --

And let's look at the date of that letter, Mr. Calvin, if you would.

It was April 23, 1996; is that correct?

A. Yes.

Q. And that's consistent with your understanding?

A. Yes, it is.

Q. Okay. Now, do you have an understanding of what was -- what Novell did next?

A. Well, my understanding is that, essentially, Novell went and did an agreement with IBM in spite of this letter.

Q. Okay. And you eventually got a copy of that agreement?

A. Yes, I did.

Q. Let me show you what's been marked as Exhibit 707. Is this the agreement you received a copy of?

A. Yes, it is.

Q. Okay. And what did you understand this to be?

A. Well, it was the buyout agreement between -- well, with IBM. Let's put it that way.

MR. HATCH: Your Honor, I'd move admission of Exhibit 707.

MR. JACOBS: No objection, Your Honor.

1693

THE COURT: Okay. It will be admitted.

(SCO Exhibit 707 received in evidence.)

MR. HATCH: Would you turn to the last page, Mr. Calvin.

Q. BY MR. HATCH: The letter that Mr. Mohan sent was April 23, correct?

A. That's correct.

Q. What was the date of this letter?

A. The 26th.

Q. So, it's three days after Mr. Mohan's letter?

A. Yes.

Q. Did Novell bother to have any communications between Mr. Mohan's letter and this agreement they cut with IBM?

A. Not that I'm aware of.

Q. Okay. So, three days later, I notice there is a signature block here for -- it says "Novell, Inc., on behalf of the Santa Cruz Operation." Do you see that?

A. Yes, I do.

Q. Did you have an understanding of why there needed to be a signature block for the Santa Cruz Operation?

A. Well, because we were the owners of the contracts.

Q. And there was a signature space for that. Who

1694

signed on behalf of SCO?

A. James T. Sullivan.

Q. Is he a SCO employee?

A. No.

Q. Who was he?

A. He was a V.P. of sales at Novell.

Q. All right. So what was your reaction to this, SCO signing a deal -- or Novell signing a deal with IBM and signing on your behalf?

A. It wasn't very, you know, favorable. Let's put it that way.

Q. You can't speak of it in open court?

A. Pardon me. I mean, that's a very soft description of what I would think of somebody signing for us.

Q. Now, what was the reaction from SCO?

A. SCO's reaction was essentially the same as mine, not very favorable, and I believe -- well, my understanding is we began to institute a lawsuit against them.

Q. Okay. And during this entire time, did Novell ever say that they owned the copyrights or they could do this without SCO's agreement?

A. No.

MR. JACOBS: Objection, Your Honor. The

1695

witness lacks foundation for all the statements Novell made to all the people on the SCO side.

THE COURT: Well, rephrase the question.

Q. BY MR. HATCH: Did anyone at Novell ever tell you that they could do this without SCO's agreement?

A. No.

Q. Did they ever tell you that they owned the copyrights and could do whatever they wanted?

A. No.

Q. As a matter of fact, they kind of -- your understanding is that they put Santa Cruz Operation, SCO, into the signature block because you had to sign it, right?

A. That's correct.

Q. Okay. How was this matter resolved?

A. Well, ultimately, it got resolved -- there were multiple thrusts, but there was an Amendment 2 signed to the agreement, the APA, which effectively closed out this kind of nonsense in the future, made it very clear that this could not be done without joint approval by both parties, and either one could simply say, "I didn't want to do it" and didn't need to justify it.

Also there was a revised agreement signed with IBM which was called Amendment X and then there was a closure agreement where SCO agreed not to sue IBM and for

1696

which there was a payment.

Q. Okay.

Mr. Calvin, Exhibit 08, which has been received into evidence.

THE COURT: What was the number again?

MR. HATCH: 08. I believe it has already been admitted.

Q. BY MR. HATCH: Is this the amendment that you're talking about?

A. Yes, Amendment Number X and Roman numerals called 10 or X, depending on how you want to read it.

MR. HATCH: Okay, Mr. Calvin, could you go to the signatures page.

Q. BY MR. HATCH: So, after you resolved all the issues, then, this time there was, again, a signature space for Santa Cruz Operation, right?

A. Yes.

Q. At this time, it doesn't say Novell on your behalf, right?

A. Right.

Q. And then who signed it this time on behalf of SCO?

A. Steve Sabbath, who was our V.P. of corporate legal.

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

1697

THE COURT: Mr. Jacobs.

CROSS EXAMINATION

BY MR. JACOBS

Q. Good morning Mr. Maciaszek.

A. Good morning.

Q. Good to see you well, sir.

A. Thank you.

Q. You understood that Novell thought it had the rights to enter into the buyout agreement with IBM in the winter of 1996, correct?

A. I don't know what they thought, but obviously they didn't. I don't believe they had the right, but --

Q. Let me ask you to take a look, sir, at Novell Exhibit K-6. Do you see you're a recipient of the e-mail at the top of the string, Mr. Maciaszek, in 1996?

A. Yes.

MR. JACOBS: Your Honor we off K-6 into evidence.

THE COURT: Any objection to K-6, Mr. Hatch?

MR. HATCH: Objection. Hearsay, Your Honor.

MR. JACOBS: It's not hearsay, Your Honor. It's an e-mail exchange at the time with Mr. Maciaszek that informed his understanding, which I just asked him about.

THE COURT: I will overrule the objection.

1698

(Novell Exhibit K-6 received in evidence.

Q. BY MR. JACOBS: Mr. Maciaszek, that's an e-mail to you from -- on April 1, 1996, correct?

A. Yes, it is.

Q. And it says -- and you're sort of copied on it. From Biff to Jeff, or Jeff to Biff, I guess -- no, Jeff to Biff.

A. Yes.

Q. These are people you are working with at SCO at the time, correct?

A. Yes.

Q. And the e-mail says -- it's referring to SVRX buy-outs. Do you see that?

A. Yes.

Q. And SVRX licenses were the preexisting UNIX licenses that SCO was administering and collecting the royalties for under the asset purchase agreement, correct?

A. Yes.

Q. And the e-mail says:

I believe that Novell views that a section of the asset transfer agreement gives them that right. That section is the one that deals with Novell being the company that can change terms on existing UNIX licenses and direct SCO to make those changes. I think Novell

1699

would also view that only they have the ability to renegotiate the existing agreements.

Do you see that?

A. Yes, I do.

Q. And then, Biff goes on and says:

That is my understanding from reading the agreements and from discussions while at Novell. It seems you think the intent of the agreement was different from SCO's viewpoint. Given that, we need to talk in depth and determine what SCO should do to force clarification.

Do you see that?

A. Yes, I do.

Q. So you understood that Novell genuinely thought, at the time, that it had the right to do buyouts of SVRX agreements, correct?

A. Well, that certainly was Biff's position at that point, yes.

Q. Did you e-mail him back and say, "No, I don't think Novell thinks that."

A. I don't recall.

Q. And, in fact, you became familiar, over the course of this matter, with 4.16 of the asset purchase agreement, and you know the provision that Biff is referring to in that e-mail, don't you?

1700

A. Well, 4.16 was originally crafted and unmodified, but it was changed in Amendment 2.

Q. With respect to buyouts, sir, correct?

A. Correct.

Q. And, in fact, it worked both ways, right? SCO could not enter into agreements relating to buyouts without Novell's participation, correct?

A. That's correct.

Q. And, in fact, SCO entered into an agreement with SUN that related to a SUN buyout without Novell's participation in 2003, didn't it, sir?

A. That was not a buyout, as I understood it, but, yes, if you want to put it that way.

Q. What is an SVRX license, sir?

A. Well, an SVRX license, I guess it would be vaguely defined, but it would be any of the SVR 4.0, 4. whatever, 4.1, 4.2 and prior licenses, as all the prior products thereof.

Q. And is there any limitation as to what component of the package of agreements that you testified to on examination by Mr. Hatch, is there a limitation as to what component of those agreements constitutes an SVRX license?

A. Not that I'm aware of, no, but I don't think it's completely defined in there either.

1701

Q. It's true, is its not, sir, that SVRX license, the term is kind of a creature of the asset purchase agreement?

A. Yes. That's correct.

Q. It didn't really have a meaning in the -- in your business before the asset purchase agreement?

A. That's correct.

Q. And it's also true that, in 1996, you were briefly involved in the -- I'm sorry -- in the potential litigation that Santa Cruz was going to bring against Novell arising out of this disagreement about the IBM buyout, correct?

A. Peripherally, yes.

Q. In fact, you signed a declaration, did you not, sir?

A. Yes.

Q. Let me show it to you.

THE COURT: What number is this, Mr. Jacobs?

MR. JACOBS: 248, Your Honor.

THE COURT: I'm sorry?

MR. JACOBS: 248. SCO Exhibit 248.

Q. BY MR. JACOBS: Would you check for me, sir, that that is your signature on the back page. You have that?

A. Yes.

1702

Q. And it's dated June 13, 1996?

A. Yes.

Q. And if you would take a look --

Your Honor, may I publish to the jury paragraph 21, the paragraph I'm about to ask him about?

THE COURT: Why don't you offer it first.

MR. JACOBS: I will offer, for the limited purpose of paragraph 21, Your Honor, SCO Exhibit 248.

THE COURT: Mr. Hatch?

MR. HATCH: Your Honor, I mean, either it's in or not. I don't think he should be able to read it. I think it's hearsay and it shouldn't be in. He has the opportunity to ask him about this, and I don't think he has gotten to the point --

THE COURT: Mr. Hatch, I didn't understand what your objection is.

MR. HATCH: I'm going to object to -- hearsay. And it's not -- if he's using it for Impeachment, I don't think he's set it up for that, yet.

MR. JACOBS: I'll do it whichever way you want, Your Honor. I'm happy to ask him --

THE COURT: He may be right. You probably ought to set more foundation --

MR. JACOBS: Sure.

THE COURT: -- if you're going to be using this

1703

exclusively for impeachment purposes.

MR. JACOBS: Actually, I was trying to refresh his recollection as to what he said in 1996 with precision, Your Honor.

THE COURT: Okay.

MR. JACOBS: Can I use it for that purpose?

THE COURT: Yes.

MR. JACOBS: May I publish paragraph 21 to the jury?

THE COURT: No. Let's have him look at it and see if he can have an answer to your question about it.

Q. BY MR. JACOBS: Based on paragraph 21 of your declaration, Mr. Maciaszek, do you recall that the IBM SVRX license was -- consisted, among other things, of SOFT-00015 and SUB-00015A?

A. Those would be two components of their total licenses, yes.

Q. Thank you, Mr. Maciaszek. Now let's talk for a minute about UnixWare. You mentioned in Mr. Hatch's questioning of you that part of your responsibility was the transition of the UnixWare product that was under -- that was undergoing work, at that time, between Novell and Santa Cruz, correct?

A. Yes.

Q. And that release was going to be UnixWare 2.1?

1704

A. That is correct.

Q. And you were instructed to put the Santa Cruz copyright notice on UnixWare 2.1?

A. Yes.

Q. The then current release of UnixWare that was going to go out from Santa Cruz, correct?

A. Yes.

Q. UnixWare is an amalgam of code from a variety of sources, correct, sir?

A. That's correct.

Q. It includes Netware code, correct?

A. Yes.

Q. Did you think that, by putting the Santa Cruz copyright notice on UnixWare 2.1, you were claiming copyright ownership to Netware?

A. No.

Q. So, we have to be a little more grandular, don't we, when trying to -- a little more specific in trying to understand what a copyright notice really means, correct?

A. Well, one could say that, yes.

Q. Similarly, we saw -- we've seen a lot of letters that went to customers in the winter of 1996 that said that Novell had transferred its ownership interest in UNIX, UnixWare, various formulations, to Santa Cruz.

1705

You recall the letters that Mr. Hatch asked you about, correct, sir?

A. Yes.

Q. Did you think that those letters were informing the customers that Novell had transferred its ownership interest in the Netware components of UnixWare?

A. Absolutely not.

Q. The customer didn't really need to know that level of detail, did they?

A. In terms of what, the imbedded products that were included in the release?

Q. Correct.

A. Right.

Q. They just needed to know, look, the business is transferring in some large sense to Santa Cruz. After the transition, you're going to deal with Santa Cruz. Correct, sir?

A. That was fundamentally what they were being told.

Q. And that was really all they needed to know at that point, didn't they?

A. Well, they needed to know that we had the rights to do what we were doing.

And there was no question -- there was no dispute about that, right, sir? It was very clear that

1706

Santa Cruz was going to be the face, under the asset purchase agreement, to the customers, right?

A. Among other things, yes.

Q. So they were going to, for example, collect all the royalties and pass them through to Novell on a 95/5 percent basis?

A. That was part and parcel of what was being done, yes.

Q. But the customer really didn't need to know that, did they?

A. What, that we were transferring 95 percent? No, I don't think so.

Q. So the letters don't say anything to the customers about, oh, by the way, we are going to pass most of the revenue we get from your Legacy licenses back to Novell?

A. We also didn't tell them how much we paid for the business, either.

Q. So, you kind of told the customers what they needed to know in order for them to interact with Santa Cruz, but you didn't go underneath and tell them all the details of the asset purchase agreement, correct, sir?

A. Right. We would answer any questions that they had. That was part and parcel of one of the reasons we visited them.

1707

Q. Under the IBM buyout, in the IBM buyout dispute, there was ultimately a resolution of the matter, correct?

A. That's correct.

Q. And, at the end of the day, Novell actually kept most of the money from IBM, didn't it, sir?

A. That's correct, subject to what was given to SCO as part of the settlement agreement.

Q. Even given the settlement agreement, sir, most of the money went to Novell?

A. That's correct.

Q. Thank you, Mr. Maciaszek?

THE COURT: Mr. Hatch?

REDIRECT EXAMINATION

BY MR. HATCH:

Q. Just so we're clear, when Mr. Jacobs said that IBM -- I mean Novell kept most of the money. How much did SCO get?

A. SCO received a million and a half dollars. I think the total sum paid by IBM was approximately 10.

Q. So that was more than 5 percent of the total amount paid, correct?

A. Without doubt.

Q. Okay.

A. Even I can do that arithmetic.

1708

Q. We don't have to break it down.

A. I would say that was about three times what would be the normal 5 percent.

Q. Okay. Now, on this buyout issue, too, when you refer to the buyout that Novell couldn't -- it couldn't be done after Amendment 2, did that refer to buyouts of the old SVRX royalties?

MR. JACOBS: Objection, Your Honor. Now we're calling for a legal conclusion about the meaning of Amendment Number 2.

MR. HATCH: No. What was your understanding?

THE COURT: Just one second, counsel.

MR. HATCH: Sure.

THE COURT: There was testimony elicited about Amendment Number 2, I believe by you, Mr. Jacobs, was there not?

MR. JACOBS: There was, Your Honor.

THE COURT: Now, is this to clarify what was raised on cross, or is this something new?

MR. HATCH: Well, I think there was some on clarity both from direct and from the cross, so I think it's both.

THE COURT: All right. Go ahead and ask the question again. Try not to elicit a legal conclusion.

MR. HATCH: All right. I will try that.

1709

Q. BY MR. HATCH: What was your understanding of the buyouts that couldn't be done, going forward, after Amendment 2?

A. Well, it would have been anything that Novell had a royalty interest in.

Q. Okay. The old royalty buyouts?

A. Yes.

Q. Okay. Now, Mr. Jacobs indicated that customers don't need to know everything. You remember that discussion?

A. Yes.

Q. There are some things a customer does need to know, correct?

A. Yes.

Q. Does it need to know who can enforce the copyrights in the contracts?

A. Yes.

Q. And who actually owns the business?

A. Yes.

Q. And that's what you were trying to tell them in the Tad Tung and other letters, correct?

A. That's correct.

Q. Now, Mr. Jacobs also asked you about they didn't need to know about Netware. Do you recall that?

A. That's correct.

1710

MR. HATCH: Could you bring up, again, the Tad Tung letter. I think it's 751. The second page of this, if you would go to that, Mr. Calvin, and scroll down a little bit.

It says: Among the products included in Amendment A are the specific products for which you are currently licensed by Novell.

Is it your understanding that's what was being transferred?

A. Yes.

MR. HATCH: Could you go to the attachment A, Mr. Calvin.

Q. BY MR. HATCH: Okay. Mr. Maciaszek, is there any Netware involved in attachment A?

A. No.

Q. Okay. What's being transferred in attachment A?

A. All of the UNIX and UnixWare products and other associated, what we called auxiliary products in Amendment 1.

MR. HATCH: Mr. Calvin, if you could go back to the first page of that exhibit.

Q. BY MR. HATCH: And the last paragraph in the letter, Mr. Maciaszek, if you would read that to us, of what Novell said it's doing here.

1711

A. "We attempted to cover all --"

Q. The last paragraph. It starts out "By."

A. "By Novell's counter signature, they acknowledge such transfer has taken place."

Q. Do you understand what that transfer was?

A. All of the assets associated with the UNIX business.

Q. Thank you.

MR. HATCH: Your Honor, that's all I have.

THE COURT: All right.

MR. JACOBS: Your Honor, a quick question from here, if I may.

THE COURT: Yes.

RECROSS EXAMINATION.

BY MR. JACOBS:

Q. Mr. Maciaszek, take a look, again, at attachment A to Exhibit 751.

A. Yes.

Q. The second line is "All UnixWare releases up to and including UnixWare release 2."

Do you see that?

A. Yes.

Q. UnixWare includes Netware components, does it not, sir?

A. Yes.

1712

Q. So your answer to Mr. Hatch was incorrect; isn't it, sir? This UnixWare is referring to a product that embraces code that consists of new code, old code, Netware code, Legacy UNIX code; correct sir?

A. Well, that product contains lots of stuff, including third-party code, which we had the rights to because all the contracts were assigned.

Q. Under license, sir, correct?

A. Under contractual agreement, yes.

Q. But, in saying that we have acquired ownership of those products, you were not intending to convey --

A. We owned the products.

Q. And not necessarily --

A. And not every component contained --

THE COURT: Mr. Maciaszek. I'm sorry. Mr. Jacob is going to ask you the question.

THE WITNESS: Okay.

Q. BY MR. JACOBS: You and I are actually in sync. You owned the products, as a whole, in the large sense, but there could be old code that you don't own, there could be Netware code that you don't own, and the two would coexist perfectly well, sir, wouldn't they?

A. No. I wouldn't agree with exactly the way you said that. I mean, we owned code other than the code that we specifically didn't own, which would include

1713

Netware and some third-party stuff that we had rights to, to ship for either royalties or for no charge. I am not talking specifically about prior releases of UNIX. We owned that stuff.

Q. Well, and that's what's in dispute in this lawsuit, sir, correct?

A. Ownership rights? My view is that -- I don't understand how you can claim that you own it if the APA says that you sold it.

Q. Well, and that's precisely what's in dispute, sir, correct?

A. I don't know what's exactly in dispute.

Q. But the point is that by saying you own something at the product level, and informing customers that ownership of the products has transferred, you're not necessarily saying anything about particular lines of code that are embedded in that product. Isn't that true, sir?

A. Well, we certainly are not saying that we own the Netware stuff, yes.

MR. JACOBS: Thank you very much, sir.

MR. HATCH: Your Honor, I do have one quick thing.

If you could bring this exhibit back up, Mr. Calvin.

1714

REDIRECT EXAMINATION

BY MR. HATCH:

Q. Just to the point Mr. Jacob just raised, to the extent there was anything that Novell had retained, they --

Go ahead to page 4 of this. Let's see. Keep going. No. Back. I went too far. Back one more. All right. Highlight the middle part of that.

It says:

If you are also licensed by Novell for source code offerings other than those listed in attachment A, then you should contact Novell.

Is that what that's saying?

A. Yes.

MR. HATCH: Okay. Thank you, Your Honor.

MR. JACOBS: I'm sorry, Your Honor.

RECROSS EXAMINATION

BY MR. JACOBS:

Q. Mr. Maciaszek, Mr. Hatch just misled you, didn't he? Didn't he, sir?

A. I don't know what you mean.

Q. Isn't it true that that is referring to completely different products, such as Netware, licensed at the product level, and not referring to code that's embedded in UnixWare?

1715

A. It's referring to specific products other than those listed on the list, yes.

MR. JACOBS: Thank you, Your Honor.

REDIRECT EXAMINATION

BY MR. HATCH:

Q. Those that aren't on Exhibit A?

A. That's correct.

THE COURT: All right. May this witness be excused?

MR. HATCH: Yes, Your Honor.

MR. JACOBS: Yes, Your Honor.

THE COURT: Mr. Maciaszek, that means you do not need to worry about being recalled. Go about your business. But I would instruct you to please not discuss your testimony with any other witnesses in this case or in the presence of any other witness or communicate the nature of your testimony to anybody else.

THE WITNESS: Thank you, Your Honor. Do I have the right and to sit and listen to subsequent, or not?

THE COURT: Yes, you do, since you're not going to be recalled.

THE COURT: Mr. Singer?

Mr. Normand?

MR. NORMAND: Your Honor, our next witness is Mr. Nagle. Do you want us to get started?

1716

THE COURT: Yes. Let's get started. We have 15 minutes.

MS. MALLEY: Mr. Nagle. Do you want to come forward, and I'll swear you in.

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

MS. MALLEY: And if you would please state and spell your name for the Court.

THE WITNESS: My name is Andrew Nagle. First name Andrew. A-n-d-r-e-w. Nagle. N-a-g-l-e.

MS. MALLEY: Thank you.

DIRECT EXAMINATION

BY MR. NORMAND:

Q. Good morning, Mr. Nagle. Are you currently employed?

A. I am employed by the SCO Group.

Q. What is your position at SCO Group?

A. I am the Senior Director of Product Development at the SCO Group.

Q. And, in brief, what are your responsibilities?

A. In that position, I manage and direct the activities of the SCO engineers that are working on our

1717

UNIX products, and I also manage a small team of technical support engineers that support our customers who are using that product or those products.

Q. What are those current UNIX products?

A. The currently shipping binary UNIX products are OpenServer 507, OpenServer 6 and UnixWare 714. In addition, there are a long list of source code products that are available for those who express interest.

Q. Could you briefly describe your educational background.

A. My most recent degree is from Carnegie Melon University. I have a Ph.D. in electrical engineering from there, and, prior to that, a master's degree in electrical engineering. I did my undergraduate work at the University of Delaware, where I hold a Bachelor of Electrical Engineering and a Bachelor of Arts in English.

Q. What did you do after you received your bachelor degrees?

A. While I was at the University of Deleware, I was enrolled in ROTC, and I spent four years following my undergraduate work in the U.S. Army Air Defense Artillery, for most of that time stationed in Germany.

Q. And could you briefly summarize the rest of your work experience, prior to SCO?

1718

A. Coming out of Carnegie Melon, I was employed at Bell Laboratories. In that position, I was in a hardware development lab for -- let's see, I started in '78, so for about six years. Then, at the end of the six years, my wife took a job in a different town and so I volunteered for an internal transfer at Bell Laboratories, and we moved to the town where my wife was working.

It was then that I came into what became the UNIX division. And then, from '84 until now, I have been in various positions, mostly in engineering, in the UNIX division doing things from everywhere from application development work all the way to directly supporting the engineers in developing the UNIX operating system itself.

Q. And how have your responsibilities at these different UNIX companies compared?

A. For the most part, they were planning and project management kinds of roles in all of the UNIX companies. I didn't really change jobs so much when the companies changed hands. I kept doing what I was doing because that was the right thing for me to be doing at the time. And then, eventually, I took over as head of engineering.

Q. When you were at Novell in 1996, what was your role -- in 1995. Excuse me, Mr. Nagle.

1719

A. For awhile, at Novell, I was a project manager for the software development of the UNIX operating system. And then, toward the end of my time at Novell, for the development of UNIX 2.1, I then was the manager of the build group at Novell which is responsible for taking the source code that is developed by the SCO -- or the Novell engineers, at the time, pulling it all together in essentially what would have amounted to an overnight software build, creating the binary UNIX product that our test engineers could then test.

Q. And when you were at Novell in 1995, do you recall learning of the asset purchase agreement?

A. I recall that, on a day, we were surprised by an invitation to the cafeteria at the Novell facility in Floren Park. And then the head of the engineering division, Mike Defazio, announced to us that Novell had pretty much decided to exit the UNIX business and that they had struck a deal with the Santa Cruz Operation to take over the UNIX business but that the SCO -- the SCO company was not in a position to take over -- take on all of the engineers that were then at Novell, and so they had struck a separate arrangement for some of the engineers to get deals in the neighborhood with another company at the time.

So, what we mostly learned that day is that all

1720

of us were pretty much looking at the end of a job with Novell, and we could interview with these other companies and try to land a position.

Q. And do you recall whether there was a transition period after Mr. Defazio's announcement?

A. Yes. There was -- after the deal closed with the Santa Cruz Operation, there was a period of time during which Novell was required to finish up certain deliverables that were part of the deal in order that Novell could make delivery of these things to the Santa Cruz Operation so that, at the end of the transition period, Santa Cruz would have a complete business that was then ready to go forward.

Q. Did you play any role in that transition period?

A. I played several. As the build manager for the UnixWare 2.1 release, it was my job to continue in that role and to see to it that the release itself, under a plan -- under Novell's auspices, that the UnixWare 2.1 release was completed. I also had several other roles during the transition to help to manage the transfer of the UNIX intellectual property, the entire content of the source code control system, the entire content of the bug tracking system, all of our user documentation, all of those software files needed to be transferred to the

1721

Santa Cruz Operation. And I participated in that as well.

Q. You said "source code control system." What is that?

A. Source code control system is a very large database that holds all of the source code control -- source code associated with the UNIX development, dating all the day back to the days of AT&T. The earliest releases would have been in that source code control system, all the way up to the then current release, which was UnixWare 2.1.

Q. So, to be clear, during the transition period in 1995, who was your employer?

A. Novell.

Q. And did Novell do anything during that time about copyright notices on Novell's UNIX products at that time?

A. The UnixWare 2.1 --

Q. Now, stop. What is UnixWare 2.1, at that point, late 1995?

A. UnixWare 2.1 was the latest version of UNIX that was in development at Novell. The development for UnixWare 2.1 started at least six months prior to the close of the asset purchase agreement. It was when UnixWare 2.1 was started. If the asset purchase

1722

agreement was contemplated, we, the engineers, were completely unaware of it.

So, it was, as I say, the latest, most current release of the UNIX System V operating system in development at Novell at the time the asset purchase agreement was announced. And it was part of the deal that, immediately upon completion of that product and immediately upon completion of the transition, that the Santa Cruz Operation would be in a position to begin shipping that product as a Santa Cruz product. It was never a Novell product. It was Santa Cruz Operation's first UnixWare product, UnixWare branded product. They had other -- I'll stop there.

Q. Before I stopped you, I had asked you about whether in late 1995 Novell did anything about copyright notices on that UnixWare product?

A. Right. Part of the development of the UnixWare product, and as part of the deal, SCO required Novell to place copyright notices indicating that the copyright was owned by the Santa Cruz Operation, SCO.

Q. And how do you know that?

A. I was -- as the build manager, I participated in various committees that managed the development of the UNIX operating system. One of those was named the modification request review board, which we of course

1723

abbreviated to MRRB and this team would meet either one or two times a week, depending on the volume of modification requests, another name for which, of course, is bug report.

Modification requests would come in various flavors. Some would be requests to add features. Others would be legitimate bug reports that needed a fix. One such modification request was the requirement to add copyrights indicating the ownership of the copyright transferring from Novell to SCO. And I sat on that board. The board approved that modification request. The record of that approval is still in the bug tracking system that we have at the SCO Group.

Q. Mr. Nagle, let me show you what's been marked as SCO Exhibit 35 entitled Statement Of Work. Do you recognize that document?

A. I do.

Q. Did you have occasion to work with this document during the transition period you have been describing?

A. Yes, I did.

MR. NORMAND: Your Honor, we would move SCO 35 into evidence.

MR. JACOBS: Could I have a copy.

No objection, Your Honor.

1724

THE COURT: Exhibit 35 will be admitted.

(SCO Exhibit 35 received in evidence.)

MR. NORMAND: So, Mr. Calvin, let's blow up Roman numeral I and the title of the document.

Q. BY MR. NORMAND: Mr. Nagle, to the best of your recollection, and briefly, could you describe what this document is?

A. This document describes the work that Novell was required to perform in order to complete the development of UnixWare 2.1 and deliver it to SCO so that SCO could begin shipping it.

Q. Do you recognize the name on the top right?

A. That's William J. Klinger. He was my boss.

Q. And, again, in summary, what was the work that Novell needed to complete under this statement of work?

A. At the time of the -- when the deal closed, the UnixWare 2.1 release had remaining about a month or two of additional development and test work that the engineering team still needed to complete. There was documentation work that still needed to be completed. And there were some -- there was some, a bit of feature work that still needed attention, all of which is actually documented in later tables in this document.

MR. NORMAND: Mr. Calvin, could we go to the second page of the document and bring out the paragraph

1725

and following bullet points for paragraph, beginning with "In addition to the changes."

Q. BY MR. NORMAND: Do you have that language in front of you, Mr. Nagle?

A. I do.

Q. Do you see the reference to the third bullet point down, "SCO copyrights added to documentation and software."

A. I do.

Q. Is that something that you can recall?

A. Yes.

Q. And can you briefly describe for the jury what that meant to represent?

A. Well, that was a formal recording of the request from SCO that such copyrights would be added to the UnixWare 2.1 product prior to having it delivered to the Santa Cruz Operation for shipment after the close of the development period. This request here, then, would have resulted in the modification request that I referred to earlier.

Q. The first paragraph of the language that's blown up refers to PCB. Do you see that language?

A. I do.

Q. What did that refer to in this context?

A. The PCB is the product change board. That was

1726

another one of the committees that we had that was involved with the development of our UNIX products. The product change board was a very high level board. It was populated more by marketing and customer relations types than by engineers, although engineers were represented. The product change board was responsible for -- to approve or disapprove feature changes to the operating system.

Q. And so, reading from this document, "SCO copyrights added to documentation and software," that was an issue that had been addressed by the product change board?

A. Well, what this says is that, in addition to the changes approved by the PCB through the development process, the following changes have been made at the request of SCO. So what I read that to be that SCO requested that the copyrights be added and that the PCB, in this case, was not involved.

Q. And with respect to SCO copyrights being added to documentation and software, do you know if that was, in fact, done?

A. I do. I'm aware of several of the engineers that actually did the work, and I recently reviewed the modification requests that recorded the activity that they did and the source files that reflect their work.

1727

Q. Two more bullet points down it says, "References to Novell and documentation removed." Do you recall that issue?

A. I do. In a similar way, the documentation development process during this time was actually very much a software process because the documentation that we delivered was delivered in online form so that people could read it on their screens and so the changes that were made were done in software files on disks and then the documentation was created from that. So the same sort of modification requests would have recorded these -- the removal of references to Novell.

Q. And, Mr. Nagle, do you know whether the modifications show that Novell continued to own the copyrights in Netware files?

A. Oh, they did. Yes. The Netware components of UnixWare remained the property of Novell, and the copyright notices reflected that.

Q. Did the modifications, however, show that SCO now owned the UNIX copyrights?

A. Yes, they did.

Q. Mr. Nagle, can you generally describe the development process for UNIX releases?

THE COURT: Excuse me, Mr. Normand. Would this be a good time the take a break?

1728

MR. NORMAND: It would be fine, Your Honor.

THE COURT: How long do you think you will take with this witness?

MR. NORMAND: Ten minutes, Your Honor, at most.

THE COURT: Is anyone over there hungry? Can you wait ten more minutes?

All right. Let's finish your direct, then.

MR. NORMAND: All right. Thank you, Your Honor.

Q. BY MR. NORMAND: The question, Mr. Nagle, was whether you could generally, now, briefly describe the development processes for UNIX releases.

A. Yes. We would -- when it was time to start a new release, we would start our activity with the top -- what we call top of tree in the source code control system, the most current version of the latest release that we were shipping in the field. Based on input from marketing resources in the company and estimates of the amount of work involved, we would agree to a technical prospectus and then engineers would go about making additions to the previous release.

Then the previous release would be continuously modified over a period ranging from 12 to 24 months and then the new release would be built, and we would begin

1729

shipping the next release.

Q. Now, Mr. Nagle, going back to your days at Novell, what was the version of UNIX before they started calling UNIX UnixWare?

A. It would have been System V release 4.2 MP. MP is for multi-processor.

Q. And have you had occasion to look at the asset purchase agreement?

A. I have. It's been some time, but I have read the asset purchase agreement.

Q. Do you know whether System V release 4.2 MP is identified among the transferred products in the asset purchase agreement?

A. It is. It's listed on a list of product names under the heading SVRX.

Q. Mr. Nagle, let me show you what's been marked as SCO Exhibit 82. Have you seen this document before?

A. Yes, I have.

Q. And can you identify it for me?

A. It's a registration of a copyright.

MR. NORMAND: I think, Your Honor, the parties have stipulated to the admission of these registrations, including this document.

MR. JACOBS: That's correct, Your Honor. We have an e-mail exchange on that and probably can do it

1730

off line and not take jury time with it.

THE COURT: All right. Exhibit 82 can be admitted without objection; is that correct?

MR. JACOBS: Correct, Your Honor.

THE COURT: All right.

(SCO Exhibit 82 received in evidence.)

Q. BY MR. NORMAND: Mr. Nagle, now that the jury can see this document, what do you understand this document to be?

A. This appears to be a copyright registration.

Q. And let's --

MR. NORMAND: Mr. Calvin, below, at the bottom of the registration, the number 4.

Q. BY MR. NORMAND: Can you see, Mr. Nagle, who has filed this registration?

A. Novell has filed this registration.

MR. NORMAND: Mr. Calvin, if you could pull up the date on the top right.

Q. BY MR. NORMAND: Do you see the date, Mr. Nagle?

A. I do.

MR. NORMAND: And could you take both of those down, Mr. Calvin, and bring out number 1.

Q. BY MR. NORMAND: What is the product for which this registration corresponds, Mr. Nagle?

1731

A. It says UNIX System V release 42 MP. It's missing the dot.

Q. Is this the release of UNIX that we were just talking about before they started calling it UnixWare?

A. Yes.

Q. How does this operating system compare to your first version of UnixWare?

A. This version of UNIX is -- was essentially rebranded and some cosmetic and a few minor features added to it to create UnixWare 2.0. UnixWare 2.0 is almost entirely UNIX System V release 4.2.

Q. Mr. Nagle, when you were at Novell, did you know that Santa Cruz put its copyright notice on UnixWare 2.1 CD's?

A. On UnixWare 2.1?

Q. CD's.

A. CE's?

Q. CD's.

A. Oh, CD's. Sorry. Yes. I was aware of that. They would have done that at the time that Santa Cruz Operation first started shipping the product.

Q. And I know I can approach. Do you recognize that CD?

A. I do.

Q. And could you explain, just quickly, for the

1732

jury what it is?

A. This is a CD containing UnixWare release 2.1.

MR. NORMAND: Your Honor, we've marked that CD physically as SCO Exhibit 752. A copy of it is SCO Exhibit 513, so we would move to admit it.

MR. JACOBS: No objection, Your Honor.

THE COURT: 752 will be admitted.

(SCO Exhibit 752 received in evidence.)

Q. BY MR. NORMAND: Mr. Nagle, do you know whether the box contains a Santa Cruz copyright notice? And let me ask you, more in your bailiwick, do you know whether the source code that's in the CD or the material in the CD has a Santa Cruz copyright notice?

A. I do know that the software for UnixWare 2.1 contains SCO copyrights.

Q. How do you know that?

A. That was the activity we referred to earlier where the engineers made the modifications that inserted such copyrights.

Q. How do you know that they are Novell engineers?

A. I was working with them at the time that the changes were made, and it was in the -- I know that the modification requests that I reviewed indicated that the changes were made in November of 1995.

1733

MR. NORMAND: Mr. Calvin, could you pull up Exhibit A to SCO Exhibit 655.

Q. BY MR. NORMAND: Mr. Nagle, do you recognize that Exhibit A?

A. Yes, I do.

Q. And could you identify what it is?

A. This is a -- the front page of the online user documentation for the command reference manual in UnixWare 2.1, and it says at the top of it, the first end line under the title, it says "copyright 1996, the Santa Cruz Operation."

MR. NORMAND: Your Honor, SCO Exhibit 655 is a declaration. We don't purport to put the declaration into evidence, but we would like to put Exhibit A and the next two exhibits in based on Mr. Nagle's testimony about his review of those same materials. So we would propose, in short, to put in a redacted version of SCO Exhibit 655.

MR. JACOBS: I have no objection to Exhibit A or B, Your Honor. They are -- I believe it is clear that they are screens from UnixWare 2.1, and, on that understanding, we have no objection. I do not yet know what Exhibit C is from this witness so I'm not sure what Mr. Normand is proposing.

MR. NORMAND: Fair enough. We'll start with

1734

Exhibit A and B, Your Honor.

THE COURT: All right. Exhibit A and B are Exhibits to the original declaration designated as Exhibit 655 and will be admitted. (SCO Exhibits A and B to Exhibit 655 received in

evidence.)

MR. NORMAND: Thank you, Your Honor.

Q. BY MR. NORMAND: Mr. Nagle, now that the jury can see Exhibit A, would you briefly describe, perhaps, again, what they are looking at?

A. Yes. This is the opening page of the command reference manual user documentation that is included in the -- online in UnixWare 2.1.

Q. I see, in the middle of the picture, a copyright notice, "copyright 1996, the Santa Cruz Operation, Inc." Do you see that language?

A. I do.

Q. And who would have added that copyright notice?

A. It would have been done by the Novell engineers during November of 1995, after the asset purchase agreement had been announced.

Q. And were you a member of the Novell review board at the time that these copyright notices were added?

A. Yes, I was.

1735

Q. Let's look at Exhibit B.

If you could pull that up the same way, Mr. Calvin.

If I asked you the same questions, would you give the same answers with respect to this exhibit, Mr. Nagle?

A. Yes.

Q. So, with respect to both Exhibit A and B, you approved these changes to the copyright notices?

A. Yes, as part of the modification review board.

Q. Do you know if the log that you described earlier reflecting these changes has changed at all since 1995?

A. As a bug reporting database, it would have been locked and unchanged since the last entry was made relative to this software.

Q. Now, the last thing, Mr. Nagle, if you could look at Exhibit C, which the jury shouldn't see yet.

Next exhibit, Mr. Calvin. Thank you. If you could pull that up.

Do you recognize what this is, Mr. Nagle?

A. I do.

Q. And could you briefly describe what it is.

A. It says an interactive session on UnixWare 2.1

1736

executing the command UNAME on this system.

Q. And what is this -- what is the significance of this screen?

A. UNAME is a command on the UNIX systems that identifies its credentials. One of the things that I see here is that the release associated with UnixWare 2.1 is listed here as 4.2 MP.

MR. NORMAND: And, on that basis, Your Honor, I would move Exhibit C into evidence as part of this redacted SCO Exhibit 655.

MR. JACOBS: No objection, Your Honor.

THE COURT: It will be admitted also.

(SCO Exhibit C to Exhibit 655 received in evidence.)

Q. BY MR. NORMAND: Now, two more questions, Mr. Nagle. You mentioned a revision control system. Can the record in the revision control system be changed?

MR. HATCH: You didn't show that to the jury, did you, after it was admitted?

MR. NORMAND: That's true. Let's show Exhibit C to the jury.

Q. BY MR. NORMAND: So, once again, Mr. Nagle, now that the jury can see this, can you explain what you just said about the reference to release 4.2 MP, two or three lines in the exhibit?

A. Just to be really clear, for those that are not

1737

familiar with how a UNIX system behaves, the dollar sign in the upper left-hand corner is a prompt that the user sees when they are invited to enter a command. The next character is UNAME minus cap X. That's a command that's given to the UNIX system, and its says, "Please tell me the credentials about this system. Tell me everything that is important about this system." And so the entries you see then are listed, system, node, release, kernel ID, machine, blah, blah, blah. The important item here is the release, which is 4.2 MP, which demonstrates that that UnixWare 2.1 is based on -- at System V release 4.2 MP.

Q. Thank you, Mr. Nagle. And the question I had asked was whether the revision control system that we've been talking about, whether that can be changed?

A. Under normal circumstances, no, but, I mean, to answer the question, since it's software, the right person with the right credentials can always make a change in a database.

Q. To the best of your knowledge, has the record reflecting that Novell changed the copyrights to Santa Cruz, to the best of your knowledge, has that record changed since 1995?

A. It has not. The record that displays today looks exactly the same as the record that would have

1738

displayed in 1995, to my eyes.

MR. NORMAND: Thank you, Your Honor.

THE COURT: All right. We will take our recess and come back for the cross examination of Mr. Nagle.

MS. MALLEY: All rise for the jury.

(Jury leaves the courtroom.)

THE COURT: Anything, counsel?

MR. SINGER: We have one issue, Your Honor. I had indicated that we wished to introduce, as admissions, Answers to our Second Amended Complaint, three specific paragraphs, which have admitted that the allegations made in the May 28 letter, December 22 press release, and on the copyright registrations apply to UNIX and UnixWare. Those are clear admissions from the standing Answer. Novell has indicated that they are going to try some effort to amend the pleadings to conform with the evidence.

My position on that is, first, we certainly don't agree to that. And, number 2, that's something that would occur later if they present evidence to try to do so. At this point the issue is simply our ability to admit, as admissions of Novell, what they said in their standing Answer to the Complaint, and I believe I am entitled to do that.

THE COURT: Mr. Jacobs.

1739

MR. JACOBS: Your Honor, I think, as has become clear -- I wonder if the witness could be excused for this.

THE COURT: Yes, Mr. Nagle, if you would, please. Thank you. Mr. Nagle, no, you don't want to go out that way. You'll get lost.

MR. JACOBS: As has become clear from the testimony, Your Honor, the words that were chosen six years ago have now become sharpened and clarified with the benefit of the actual trial. It has never been Novell's contention, to begin with, and I think this is clear from lots of back and forth, the UnixWare that Santa Cruz developed and that SCO developed after the asset purchase agreement, that Novell claimed copyright in those entire products. So the answer would be confusing, as read. It would be quite confusing to the jury to hear.

Secondly, the actual evidence that's come in at trial is that Novell has said we owned the, quote, UNIX copyrights. And so I think that's going to be confusing to the jury as well. The actual statements say UNIX and do not say UnixWare. Our procedural proposal was to amend the Answer, if that's necessary. I appreciate where Mr. Singer is coming from. It's in the Answer. But now we know a lot more and the jury knows a lot more,

1740

and we are concerned about confusion.

THE COURT: Mr. Singer?

MR. SINGER: This is an admission. Our contention is that when they slandered our title, it was both the UNIX and UnixWare. It was alleged that way. The statements say, specifically, for example, SCO subsequently registered claims to UNIX and UnixWare copyrights with the United States copyright office. They specifically alleged. Novell admits that on May 28, 2003. Jack Messman sent a letter to Darl McBride of SCO in order to assert Novell's claims to the UNIX and UnixWare copyrights. This is a company that is well aware of what UnixWare is and what UNIX is. These have never been amended.

I am entitled titled to have them put before the jury as admissions of Novell that when they put out this slander it applied to UNIX and UnixWare products. And this is an 11th hour change to try to say, "Well, we only asserted claim to UNIX. We didn't assert claim to UnixWare." Their statements pertain to both UNIX and UnixWare, and I am entitled to put that in.

THE COURT: Counsel, the Court will let you know what it is thinking at the end of the break, all right? Thank you. We will take 20 minutes.

(Short break.)

1741

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

(12:30 p.m.)

MR. SINGER: Your Honor?

THE COURT: Yes, Mr. Singer.

MR. SINGER: Um, I just wanted to note, if I might, one additional point. We do not have any objection to making clear, in reading this, that the reference to UNIX and UnixWare copyrights is at the time of the APA. So that would eliminate any confusion that we are suggesting that these assertions were to the SCO UnixWare copyrights that are generated after the APA. The point is as of the time of the APA because we think that that is what we're talking about. But to the extent there was an issue raised about the confusion, I think that could easily take care of that.

THE COURT: Well, counsel, based on what I know about this case so far, I would say that Mr. Jacobs' position is completely without merit. If something develops during this next week that persuades me otherwise, then perhaps I will have a different view of it. If this is pursued to any degree, then I have no choice but to allow you to read the admissions into the record.

MR. SINGER: Thank you, Your Honor.

THE COURT: Let's bring the jury in.

MR. BRENNAN: Just one quick thought, Your Honor, unrelated to what the court just mentioned.

THE COURT: Go ahead, Mr. Brennan.

1742

MR. BRENNAN: As you know, we have been working with respect to the scope of Mr. Tibbitts testimony given the work product and privilege objections that have been raised. There is quite a number of them. My thought is rather than interrupt or hold the jury further, perhaps we ought to finish with Mr. Nagle, see what the day looks like, but I think it will probably take five or 10 minutes to go through it, maybe less, maybe I'm overstating it, but to go through the number of objections that were asserted in his deposition. So I just wanted to alert you.

THE COURT: So you have not yet reached an agreement that will allow Mr. Tibbitts to be brought to the --

MR. BRENNAN: We have not reached an agreement on the scope of what his examination will be.

THE COURT: Mr. Normand?

MR. NORMAND: In my view, Your Honor, we're talking about the margins of Mr. Tibbitts testimony. But with respect to the margins, there is room -- there is disagreement between Novell and SCO.

THE COURT: Well, if you're suggesting that when we finish with Mr. Nagle that we recess for the afternoon, is that what you're saying, or do you want me to take another recess and bring the jury back?

MR. BRENNAN: I'm sure that perhaps would be of concern to the court. I am willing to do it either way.

1743

I'm willing to do it now. I just didn't want to have a lengthy or lengthier break than the court would want and I didn't want to interrupt the cross-examination. I am happy to do it either way that the court would prefer, Your Honor.

MR. NORMAND: Your Honor, we would prefer to have Mr. Tibbitts come on this afternoon, and I take it that if you're concerned about bringing the jury in and out, maybe we ought to try to do it now.

THE COURT: Well, let's do it now then.

MR. BRENNAN: Okay. Your Honor, perhaps I can do this. The deposition transcript that is at issue is the deposition of Ryan Tibbitts taken in this case on April 24th, 2007. I believe, Your Honor, we have tendered a copy of that transcript, and I would like to highlight, at least in my mind, what appear to be three species of lines of examination to which objections on the ground of either attorney/client privilege or work product were raised and for which the witness, Mr. Tibbitts, was instructed not to answer.

The first of those is found on page 16 of the April 24th, 2007 transcript and it appears at lines 10 through 18. And perhaps I can very briefly give some context that I think will help the court explore these areas. Mr. Tibbitts was asked about a number of contacts that he had with either SCO licenses or potential licensees and, for example, in the

1744

reference that I just gave you the question that was asked of him, this has to do with Questar, again page 16 line 10, "With respect to the Questar license, does SCO contend that Novell interfered with that in any way; that it would have been a larger license, had Novell not done what it's done and said what it's said?"

And then the objection, and then what follows is the assertion by the witness, who is an attorney, "That's work product." And thus, as the court can read, there was no disclosure of -- well, let me back up. The witness was not allowed to answer the question as to whether SCO even contended whether Novell had interfered and Novell was not at that deposition in April to find out the basis for that contention.

THE COURT: Mr. Normand?

MR. NORMAND: I was going to wait for Mr. Brennan to finish because I'm taking an entirely different approach but let me try it this way. On that question, Mr. Tibbitts is not testifying at this trial. He is not testifying as a damages expert. He will testify to his discussions with potential SCO source licensees, and he testified at length to all of those discussions from pages 9 to 40 in his deposition.

We are not putting him up as an expert on the issue of how much damages SCO suffered, or even whether SCO suffered

1745

some quantifiable amount of damages related to these discussions with potential customers.

MR. BRENNAN: The problem is, this is repeated time and again, is the witness is asked whether there is even a contention being made with respect to this customer. And the answer is, as you can see --

THE COURT: The contention being that this would be considered part of the damages?

MR. BRENNAN: Well, twofold. Yes, absolutely, and second of all, at the deposition it was confirmed that any examination of Mr. Tibbitts would be work product on that subject.

MR. NORMAND: So if I were asking --

THE COURT: The work product on the issue of damages.

MR. BRENNAN: Twofold. Yes on damages, and in particular with respect to Questar. Because as we will see in a minute, in the deposition Mr. Normand stated on the record that Mr. Tibbitts would not be a witness offered at trial at all on the subject of damages. So there is a very broad assertion on the issue of damages, and then there is the more narrow ones, for example, I think it would be inappropriate for Mr. Tibbitts to be offered whatsoever on the issue of damages. I'll show the court in a minute the reference, and also to be asked about Questar in particular given this instruction here.

1746

MR. NORMAND: And Mr. Tibbitts will not be testifying on the issue of damages. That was yesterday's testimony and the day before. He will be testifying to the nature of the discussions with customers. I won't ask him what conclusions he drew from those discussions, whether he concluded from those discussions that SCO had suffered some particular amount of damages. This is a standard work product objection, Your Honor. He was not an expert on damages. So the questions that went to that issue were not ones that were appropriate for him.

THE COURT: Mr. Brennan, if you are asserting that he ought not to be allowed to answer any questions about customers that were affected by the Novell statements, um, I think that is overly broad.

MR. BRENNAN: Well, perhaps -- I appreciate that and that is not the purpose of what I wanted.

THE COURT: Then what are we disputing here?

MR. BRENNAN: That he shouldn't be able to ask him, first of all, about Questar. Because the question put to the witness is does SCO contend that Novell did something relative to Questar. And he was instructed not to answer that on work product. That is as far as I have gone is just --

THE COURT: Let's leave Questar out. No questions about --

1747

MR. NORMAND: Your Honor, that was not an accurate characterization of either his testimony or the instruction given to him. I would ask Mr. Tibbitts two principal things about Questar. What did you show them, if you can recall, and what was said, if you can recall. That is it. That is nothing to do with the instruction I gave at the deposition.

MR. BRENNAN: Your Honor, here is the unfair part about it. It is not relevant if Mr. Tibbitts was asked as the question says, "is SCO contending that Novell did anything to interfere with Questar." And that basic question can't be answered because, you see, "that's all part of the ongoing damage analysis, and I would believe that's work product."

THE COURT: Mr. Normand, if you ask the questions you just told me you are going to ask him, does that not then imply that there was an interference with Questar by Novell, a question of which he was not allowed to answer at the deposition?

MR. NORMAND: No. But Novell has been entitled to ask any of our damages experts the conclusions they drew from any work they may have done.

THE COURT: That is not my point, Mr. Normand. If I -- if I am not understanding this, then I want you to tell me where I don't understand it. If you are allowed to ask Mr. Tibbitts questions about Questar, does that not by

1748

itself imply to the jury that you are asserting, even though you don't directly say okay what was the extent of the damage, what was the nature of the contract lost, et cetera, does that not imply to the jury that is part of the damage claim in this case? Just simply asking.

MR. NORMAND: I don't think it does and I don't think I am --

THE COURT: Then why would you ask the question then?

MR. NORMAND: Because I was going to say, Your Honor, I don't think I'm cutting it too thin. One of the issues, one of the arguments Novell has made is that SCO was not presenting evidence to any potential customers. So part of what Mr. Tibbitts would speak to, I did speak with these customers, I did present to them support for our position.

THE COURT: Okay. Now you're speaking in the abstract. I'm speaking about Questar. I have been focused on some deposition testimony where the question was asked of him at the deposition about Questar, you objected and apparently no more questions were asked.

MR. NORMAND: No, that is not correct at all. He testified at length from pages 9 to 16 about everything that he could remember about his discussion with Questar.

MR. BRENNAN: Your Honor, the point there is that we were told that there was going to be no contention. Your Honor, we have, for example, this point is put --

1749

THE COURT: What do you mean no contention?

MR. BRENNAN: The question again was asked is with respect to the Questar license, does SCO contend that Novell interfered with that in any way, that it would have been a larger license had Novell not done what it has done and said what it said. Objection to the form. Answer, well I think that's all part of the ongoing damages analysis, and I believe that is work product.

THE COURT: I have that whole deposition here, Mr. Normand. Did you just give me something that I don't have?

MR. NORMAND: I may have not if you already have it. It is pages 9 to 16 on the issue of Questar in particular, Your Honor.

MR. BRENNAN: Your Honor, I think -- I think this precisely same issue comes into sharp focus on page 20 of the deposition of -- where now SCO moves to the Department of Defense. So the question of Novell's counsel at line four on page 20, "I take it that the Department of Defense did not take any license -- take a license of any kind? Answer, they did not. Question, does SCO contend that they would have taken a license if not for Novell's actions? Mr. Normand, I'm going to object on the grounds of work product. There's an objection to the form to the extent you're asking what a complaint might say or what a pleading

1750

might say. But to the extent it goes beyond that, I think we are in the area of work product. Answer, I think that's work that we are doing with our experts and the attorneys are involved and so am I, and so I think it's work product." So that is precisely the same issue with another client.

THE COURT: Mr. Normand?

MR. NORMAND: It is an entirely different issue. The question is whether as to what Mr. Tibbitts will be testifying to whether Novell has already been given the opportunity to cross-examine him on that subject and they have at length. If I were to finish my questions by asking Mr. Tibbitts what conclusions have you drawn with respect to the damages that you think SCO suffered, Novell would have an argument. I am not asking him that question.

THE COURT: Well, I see here that you, Mr. Brennan or whoever is taking the deposition, was allowed to continue to ask questions about the Department of Defense.

MR. BRENNAN: That is correct, Your Honor. However, when they withdraw -- when they won't allow the witness even to answer the questions as to whether there is an intention that Novell did something wrong, they are removing the Department of Defense, they're removing Questar from their pallet of claimed customers who they allege constitute the basis of their damages assertion. We have -- those are two specific instances where they wouldn't let the witness even

1751

answer whether there was a contention. And then as I mentioned, there is the broader problem, this is found on Page 51 of the deposition, and the context the court certainly could look back at Page 50 where Novell's attorney, at that time it was Mr. Melaugh of the Morrison and Foerster firm, on Page 50 referenced the fact that he was trying to get answers. They took a break. Mr. Normand at Page 51 Line 1. "We just took a break to talk about how to approach the questions that Mr. Melaugh flagged. What we will say is Mr. Tibbitts is not going to be a witness on the issue of damages."

MR. NORMAND: Which is a true statement.

THE COURT: By that, Mr. Normand, you mean that he is not going to be a witness who will be asked to quantify the amount of damages, correct?

MR. NORMAND: That is correct, Your Honor. And I'm not even trying to pull a fast one. I'm not going to ask him did they suffer some damages that you just don't know how to quantify. He is not here to testify to the issue that SCO has suffered damages.

THE COURT: But you are going to ask him questions about specific customers that he has knowledge of who he thought would have undertaken a SCO source contract but did not because of the Novell actions.

MR. NORMAND: That is correct. He is going to testify

1752

as a percipient witness. The objection was to the extent he was being asked questions beyond that.

THE COURT: So the question is whether or not that constitutes testifying about damages?

MR. NORMAND: Well, it is testifying to facts from which juries can draw inferences. He is not an expert on the issue of damages. That was the objection made. He is the general counsel of the company. He is being deposed. And now he is being asked well, what do you know about what experts might be doing or what work might be done? So the objection is he is not testifying about that. He does know something about it because he has got experts on his team and he speaks with attorneys about it. But he is not going to testify to that. That is not what he is here for and that is not what he is here for at trial here today.

MR. BRENNAN: The objection was not that it was subject to expert testimony, the objection was work product.

THE COURT: It appears, however, that as to both Questar and the Department of Defense, despite the objection, you did ask him questions about those two specific customers. So anything he may be testifying to here today will not be a surprise to you.

MR. BRENNAN: It will be a surprise to the extent that we were told that there was no contention relative to those customers. It will be a surprise to the extent that we were

1753

told that Mr. Tibbitts would not be testifying as a witness regarding damages.

THE COURT: Apparently the two of you had a misunderstanding about what was meant when Mr. Normand represented that he would not be called as a witness regarding damages. The court will allow questions to be asked about specific customers. He will not be asked -- allowed to ask or be asked or answer questions about the two specific customers, Questar and Department of Defense beyond those questions that were allowed at the deposition.

MR. BRENNAN: Thank you, Your Honor. One other species and then I think I can dispense with the third species quickly as well. On page number -- well it runs 47 through 49 of the transcript. I would like to start with Page 47 Line 11. And the question is, "One of the things SCO has said in Interrogatory response about damages was that SCO's existing UNIX customers expressed their concerns over Novell's claims and SCO suffered further losses in that business. Do you have any personal knowledge of concerns expressed by UNIX customers about Novell's claims? Objection to form. Answer, yes, I do. What is that? Mr. Normand, I'm going to object to that on the grounds of work product."

MR. NORMAND: Mr. Tibbitts is not testifying today to any complaints from existing UNIX customers.

1754

MR. BRENNAN: Okay.

THE COURT: All right.

MR. BRENNAN: And then the last species, Your Honor, it frankly runs a span of pages 54 through 72. I don't expect the court at my invitation at least to read all of that. I can highlight --

THE COURT: Can you summarize it?

MR. BRENNAN: Yes, I will. Over that span, interspersed between pages 55 through 72 of the deposition, the questioning attorney for Novell, Mr. Melaugh, and that is spelled M-E-L-A-U-G-H, for the benefit of the reporter, asked about item of correspondence that Mr. Tibbitts had sent to Novell. And I think if I show one, that will illustrate the problem with all of them, Your Honor.

THE COURT: Okay.

MR. BRENNAN: So perhaps if I could, as an illustrative exhibit, direct the court's attention to Page 67 at Line 13. And the question is, "This is Exhibit 271. It's been Bates labeled NOV 43173. It's dated October 9. It's from Mr. Tibbitts to Mr. LaSala. Like the last letter, it also has some faxed headers at the top which bear different dates."

Your Honor, rather than read all of this into the record if I can just jump forward to the stated objection where the question is on Page 68 Line 1. And the second

1755

paragraph in the first line you see, "We remind you, Novell, that Novell sold the UNIX business, source code and copyrights to SCO for approximately $150,000,000. How do you arrive at that figure?" Mr. Normand, well, I think that's the subject of the same work product objection in that however Mr. Tibbitts arrived at that figure, whether it was the result of discussions with outside counsel, whether it was a result of his review of, for example, the APA, whether it was the result of his discussions with others regarding the APA, with respect to any of those sources the number reflects his mental impressions, his analysis, his organization of information. And I think therefore his basis for that number is his -- reflects his work product. Mr. Melaugh, I take it you are directing him not to answer? Mr. Normand, correct. Mr. Melaugh, are you taking that -- answer, I think it is privileged, also. I wasn't involved in the transaction."

Now that has to do with the letter that Mr. Tibbitts sent to Mr. LaSala of Novell. We have that same very sort of request and instruction on work product grounds that in fact not only that letter, but a subsequent letter sent by Mr. Tibbitts to Mr. LaSala on October 9th, 2003. That is covered in pages 67 through 68. And we have almost identically the same exchange with respect to a letter that Mr. Tibbitts sent to Mr. LaSala on February 5th, 2004 and

1756

that colloquy spans pages 69 through 72. The problem here, Your Honor --

THE COURT: Mr. Brennan, may I interrupt? So are you then requesting that Mr. Normand not be permitted to introduce those as exhibits through Mr. Tibbitts?

MR. BRENNAN: Um --

THE COURT: Or that they be -- that those portions --

MR. NORMAND: Your Honor, I'm sorry to jump in but I think I can shortcut this. The only letter that Mr. Brennan that has referred to that I would use is marked as SCO Exhibit 110. That is the October 9th letter. My instruction was clear and therefore I should not be entitled to show the jury or ask Mr. Tibbitts about the sentence of this letter that refers to the $150,000,000 figure. I would propose --

THE COURT: But the other two letters you do not intend to use?

MR. NORMAND: I would use the letter, not that line.

THE COURT: I'm sorry, the other two letters?

MR. NORMAND: The other two letters I'm not using.

THE COURT: You're not going to use. As to this letter if that part is redacted, and there is no question about that figure, are you all right? You're all right?

MR. BRENNAN: Yes, but I think there is also a provision on the second page where --

1757

MR. NORMAND: Mr. Brennan is correct and this is not one that I would have Mr. Tibbitts read. It is a paragraph -- would you like me to read it to Your Honor?

THE COURT: Is it something that you can have redacted?

MR. NORMAND: It is, yeah.

THE COURT: Then let's just have it redacted.

MR. BRENNAN: That solves our problems, Your Honor. Thank you.

THE COURT: All right.

MR. BRENNAN: I appreciate your indulgence with the discussion.

THE COURT: It is important. I understand. Anything else before we bring the jury in?

MR. SINGER: No, Your Honor.

MR. NORMAND: No, Your Honor.

THE COURT: Ms. Malley. Mr. Nagle, I hope this makes you happy that you are an engineer and not an attorney.

THE WITNESS: Yes, Your Honor. I assure you we have equally Archean discussions in our field.

THE COURT: I'm sure.

THE CLERK: All rise for the jury.

(Whereupon, the jury returned to the courtroom.)

THE COURT: Go ahead, Mr. Jacobs. //

1758

CROSS-EXAMINATION

BY MR. JACOBS:

Q. Good afternoon, Mr. Nagle. I'm Michael Jacobs one of the counsel for Novell.

You discussed with Mr. Normand your employment history and the various roles that you had in the course of your tenure with various companies you worked with. I would like to ask you about one of the roles that you have played with SCO, which is your role in the UnitedLinux partnership.

MR. NORMAND: Your Honor, this is both beyond the scope of my direct and pertains to an issue that is stayed with respect to this case. I am hesitant to say more without asking for a side bar.

MR. JACOBS: I will not venture into stayed territory, Your Honor, and he was asked about whether his jobs had remained the same through his various times in the UNIX business. And this is a distinct role he played.

MR. NORMAND: Your Honor, I won't belabor the point but it has nothing to do with the subject matter of my direct.

THE COURT: Well, maybe we better have a side bar, counsel.

(Whereupon, a side bar conference was held.)

MR. NORMAND: We didn't make it far, did we.

THE COURT: We did not get very far.

1759

MR. JACOBS: This witness was the representative on UnitedLinux. I would like to ask if SCO was a partner in UnitedLinux. He was the representative that SCO actually released SCO Linux 4 powered by UnitedLinux in one of the issues that arose in the community around SCO source that relate. I won't ask the ultimate question of this witness, but one of the issues that relates to SCO source is that in connection with SuSE, UnitedLinux was cited on the e-mail to him as one of the reasons people didn't take SCO source licenses. That is where I would like to go.

MR. NORMAND: Putting aside for the moment the question of any relevance, perhaps they could get that in in their case but that has nothing to do with what I asked Mr. Nagle about. That is my point.

THE COURT: He asked him about his various roles.

MR. JACOBS: Your Honor, he just confined him to his time in 1995.

THE COURT: Mr. Jacobs, it is really a stretch to say that they saw him asking a very general question about his background to say that he opened this door. And I just don't think in good conscious I can allow you to go there with this witness.

MR. JACOBS: Thank you, Your Honor.

MR. NORMAND: Thank you, Your Honor.

THE COURT: We're not done.

1760

MR. JACOBS: The only thing then that I need to do, I don't want to make him subject to recall, is to get him to authenticate this or have Mr. Normand stipulate that I can bring it in without his authentication. Sorry.

MR. NORMAND: But you're not going to ask him about it? You want to get it in through him?

MR. JACOBS: Or stipulate it is admissible without him being here to authenticate it. SCO received -- this is an e-mail that SCO received.

MR. NORMAND: That is fine. We'll stipulate to that.

THE COURT: Let me ask you this.

MR. JACOBS: C-14.

THE COURT: Are you going to recall him?

MR. JACOBS: I don't want to.

THE COURT: Well, I don't either. And so, you know, I would revisit this ruling if you are going to tell me that you're going to recall him to get this testimony in any way.

MR. JACOBS: I would recall him to get in about ten minutes of testimony on UnitedLinux in our case in chief.

MR. NORMAND: I took it from my comments that they had some other way to speak to this issue of UnitedLinux in their case. We wanted to reserve our rights honestly whether it is relevant at all. If we have to pull him back, obviously, that is a terrible result but this is springing up at the last second. They have never indicated they

1761

wanted to use him as a witness in their case.

THE COURT: I would have to -- I mean the argument would be that they're bringing him back as a rebuttal witness. Ultimately, they will recall him and I would have to allow him to be recalled.

MR. NORMAND: As a rebuttal witness?

MR. JACOBS: One, this will take five minutes, Your Honor.

THE COURT: There are much trickier things that have occurred in this trial than that.

MR. NORMAND: That is the standard we're using?

THE COURT: Yes.

MR. NORMAND: He can ask his questions.

THE COURT: You raised the bar. If you want to accept that I think it would be more efficient.

MR. NORMAND: Okay, very good.

THE COURT: All right.

(Whereupon, the side bar conference concluded.)

THE COURT: I will hold you to the five minutes, however.

Q. (By Mr. Jacobs) Mr. Nagle, you were SCO's representative to the UnitedLinux consortium; correct?

A. I was.

Q. And can you describe briefly what UnitedLinux was all about?

1762

A. There were four companies around the world who consolidated their resources to create a distribution of Linux that they would make available in the market.

Q. And SCO was one of the partners in that consortium; correct?

A. It was. When it was first started it was Caldera that was the partner.

Q. Same company, different name?

A. Correct.

THE COURT: What time frame are we looking at?

Q. (By Mr. Jacobs) What time frame are we looking at?

A. 2001, 2002, I believe.

Q. And, in fact, in November of 2002, SCO released SCO Linux 4 powered by UnitedLinux, correct, Mr. Nagle?

A. Yes.

Q. Let me show you an exhibit marked as I11. Um, I11 is a press release from SCO, correct, Mr. Nagle?

A. Yes.

MR. JACOBS: I offer I11 into evidence, Your Honor.

MR. NORMAND: No objection, Your Honor.

THE COURT: It will be admitted.

(Whereupon, Defendant's Exhibit I11 was

received into evidence.)

Q. (By Mr. Jacobs) So at this point in time,

1763

November 19, 2002, Mr. Nagle, SCO is part of the UnitedLinux consortium and releasing a version of Linux; correct?

A. Yes.

Q. And one of the goals of the UnitedLinux consortium was in fact to create an enterprise suitable version of the Linux Operating System; correct?

A. Yes.

Q. For example, and SCO says, for example, in the press release, um, that it is -- that this version of the Linux Operating System in the second line, Mr. Lee, "is a high-quality Linux Operating System designed for mission-critical business applications, with guaranteed stability, security and worldwide support from SCO." Do you see that?

THE COURT: Mr. Normand?

MR. NORMAND: Your Honor, can I just have a standing objection to relevance for this question and then the next three and a half minutes?

THE COURT: Yes.

THE WITNESS: Yes, I see that.

Q. (By Mr. Jacobs) So at this point in time, SCO is offering an enterprise ready version of Linux that it has been created with the assistance of the partners and with the assistance of the UnitedLinux consortium?

A. Yes.

1764

Q. Now, SuSE was one of the members of the UnitedLinux consortium; correct?

A. Yes.

Q. And just to get us all on the same chronology, ultimately SuSE will be purchased at the end of 2003 by Novell, correct?

A. Yes.

Q. So about a year after this release, Novell will purchase the SuSE company, correct?

A. Yes.

Q. And then Novell will have a distribution of Linux from SuSE, correct?

A. Yes.

Q. Okay. So I want to now go back in time just a little bit and show you one more document here. C14, Your Honor.

MR. NORMAND: Same objection as to relevance, Your Honor, but pursuant to the discussion.

THE COURT: All right. The objection is noted, Mr. Normand. Thank you.

Q. (By Mr. Jacobs) Mr. Nagle, C14 is an e-mail from you dated May 8th, 2003?

A. I see that.

MR. JACOBS: I offer C14 into evidence, Your Honor.

THE COURT: It has been accepted.

1765

Q. (By Mr. Jacobs) Mr. Nagle, you were forwarding a statement. Why don't you go down to the second paragraph. You were forwarding to others a statement that had been issued by SuSE, correct?

A. So it appears.

Q. And in that statement, SuSE was reacting to the SCO source campaign, correct? If you look at the first paragraph.

A. It appears so.

Q. In --

A. The context seems to suggest that it was.

Q. In the first paragraph it says, "So far, SuSE Linux isn't losing any sleep over a legal battle brewing between IBM and the SCO Group." Do you see that?

A. I do.

Q. So now back to the second paragraph. SuSE is, in this statement, it is reassuring its Linux customers that quote, "they have nothing to worry about because the company has a contractual agreement with SCO within the framework of the UnitedLinux initiative." Do you see that?

A. I do.

Q. And then the statement of assurance goes on to say, "we can say today with assurance that neither SuSE nor its customers need to be concerned about facing any demands from SCO." Do you see that?

1766

A. I do.

Q. And isn't it true, Mr. Nagle, that one of the issues in the marketplace for SCO source licenses was the question arising out of the UnitedLinux agreement and whether the UnitedLinux agreement meant that, for example, SuSE and its customers were immune from any claim from SCO?

A. I am not sure I can cite firsthand knowledge of that issue in the marketplace but --

Q. You are aware that the statement was made by SuSE?

A. I'm aware, yes.

Q. And it got wide publicity, correct, Infoworld?

A. I can't confirm that.

Q. Do you see that it is from Infoworld?

A. I do.

Q. Infoworld is a very widely circulated journal?

A. I accept that.

THE COURT: Time is up, Mr. Jacobs.

MR. JACOBS: And I'm done, Your Honor.

Q. (By Mr. Jacobs) Let me now bring you back to 1995 and 1996 and your work on the transition plan. I would like to show you SCO Exhibit 38. SCO Exhibit 38 is a transition plan related document from the time of the APA?

A. Yes.

Q. And that is your signature, handwriting in the

1767

upper right hand, corner?

A. Yes.

Q. I will represent to you, sir, that the boxing is -- that is, the boxes around the various portions of this document were placed on the document by SCO and are not part of the original exhibit.

So this document is describing some of the activities that are underway through transition of business that is going to Santa Cruz to Santa Cruz, correct?

A. I'm sorry. Say that again.

Q. It wasn't very well done. This is a document that is describing some of the activities that were underway to effectuate the transition of business to Santa Cruz, correct?

A. From Novell, yes.

Q. And in particular, a lot of the activity had to do with, as I think you discussed with Mr. Normand, transitioning source code, correct?

A. Correct.

Q. I would like to ask you to look at, it is the second to the last page, it has got a stamp in the lower right hand corner of 2833.

THE COURT: Are you going to offer this document?

MR. JACOBS: I'm sorry, Your Honor, absolutely. SCO Exhibit 38 offered into evidence.

1768

MR. NORMAND: No objection, Your Honor.

THE COURT: It will be admitted.

(Whereupon, Plaintiff's Exhibit 38 was

received into evidence.)

Q. (By Mr. Jacobs) Did you see in the box around the lower third of the -- I'm sorry, the end of the top third of the page there is a box, a box added by SCO as part of the document process around it, "Appendix: Intellectual property transfer plan."

A. I see that.

Q. Could you explain what is going on in the plan underneath that box?

A. Yes. This describes the activities that were going to go on to transfer certain intellectual property from the Novell source code archives to the Santa Cruz source code archives.

Q. So in your answer, sir, you embrace the real focus of my question. What does the word intellectual property refer to there?

A. It refers to the source code, it appears.

Q. And isn't it true, sir, that sometimes when people use this phrase, intellectual property, they're using it to refer in some loose sense to technology or the intellectual assets of the company and not necessarily to patents, copyrights or trademarks?

1769

A. Are you asking for a layman's interpretation of that phrase?

Q. Precisely.

A. It can be used in lots of different ways. That is why there are intellectual property attorneys.

Q. This document evidences a lay person's use of intellectual property when it refers to source code, correct?

A. Yes.

Q. Let's talk about copyright notices, sir. Isn't it true that practices with respect to copyright notices in the UNIX world were well-established prior to the asset purchase agreement?

A. I really can't speak to that. I can tell you that the copyright notice practices within the companies that I worked for were fairly well-established. Around the rest of the UNIX world, um, not my purview.

Q. Isn't it true, sir, that the copyright notice practices were governed by the AT&T forum dating back to the old UNIX days of the license agreement, to be specific, the sublicensing agreement?

A. I am not aware of any language in the sublicensing agreement that specified specifically the form of copyright notices that needed to be in the source code.

Q. So, um, I didn't mean that as a trick question,

1770

sir. I have the agreement in front of me. So let's take a look at E1, please. I believe it is in evidence already. And in particular let's look at the top --

THE COURT: Which document is this?

MR. JACOBS: E1 is the AT&T Technologies sublicensing agreement with, in this case, IBM.

THE COURT: E1 is not yet admitted.

MR. JACOBS: I offer E1 into evidence.

MR. NORMAND: No objection.

THE COURT: Mr. Normand, I didn't hear you.

MR. NORMAND: No objection. I thought this exhibit was actually already in.

THE COURT: E1 is not, but it is now. It will be admitted.

(Whereupon, Defendant's Exhibit E1 was

received into evidence.)

MR. NORMAND: It is in evidence as a different number, I guess. So no objection.

THE COURT: It could be in as a Plaintiff's Exhibit then?

MR. NORMAND: It is, Your Honor.

THE COURT: All right.

MR. JACOBS: I apologize, Your Honor.

Q. (By Mr. Jacobs) So, sir, I will focus you on the top of Page 5 of this agreement. And subparagraph B turns

1771

out to be in Section 2.08 which is on the previous page. Why don't I give you my copy so you will have the actual document. It will make it easier. Highlight subparagraph B, Mr. Lee.

The license agreement says, "Each portion of a sublicensed product shall include an appropriate copyright notice. Such copyright notice may be the copyright notice or notices appearing in or on the corresponding portions of the Software Product on which such sublicensed product is based or, if copyrightable changes are made in developing such sublicensed product, a copyright notice identifying the owner of such changes." Do you see that?

A. I do.

Q. It is a little -- the language is a little hard to parse. So let me see if I can simplify it and see if this is consistent with your recollection of the actual practices in the companies in which you worked.

Wasn't it the case that when -- in the companies in which you worked, if a change was made or an addition was made in the source code, the copyright notice in that portion of the source code would be updated to reflect that the company making that change was the copyright holder?

A. If it was the case that we made changes in our source code, in our source code database, based on newly received code from a third-party in which that third-party

1772

owned copyright, it is true that we would have put a copyright notice into the source code to reflect that ownership. That was a common practice with hardware drivers and other such software.

Q. And with respect to the code that say Santa Cruz, Santa Cruz -- actually let me back up a second. It has been 15 years now since Santa Cruz and then SCO have been the companies that have evolved UnixWare, correct?

A. Yes.

Q. What is your estimate of the amount of code that Santa Cruz and SCO have contributed to the UnixWare product?

A. I really don't have an estimate.

Q. Would it surprise you if it is in the millions of lines of code?

A. Certainly not.

Q. It would not surprise you?

A. Certainly not.

Q. Would it surprise you if around 1995 there were roughly seven million lines of code in UnixWare and now there are 14 million lines of code?

A. It wouldn't surprise me.

Q. So I want you to assume with me that in all of those millions of lines of code that Santa Cruz has written or SCO has written in UnixWare, there is no dispute about copyright ownership because that post dates the asset

1773

purchase agreement? Can you assume that with me for a minute?

A. Okay.

Q. Isn't it the case that in those lines of code, one would expect to see a Santa Cruz or a SCO copyright notice?

A. No, sir. Um, the copyrights that we had -- that we added to our source code products were added only at the time that we published the source code products. So that, um, when we created a source code product that was associated with, for example, UnixWare 2.1, the act of creating that source code product inserted copyright notices into all of the code because we owned the copyrights in all of the code. We did not as a matter of engineering and development practice on a daily basis add new copyrights when we the owner of the copyrights added code to the databases.

Um, what I said in my earlier testimony is that when we received code from a third-party, and the third-party owned the copyright, we felt obliged to record that copyright ownership. But since we owned all of the copyrights in the source in the database, except where it was already noted that a third-party owned the copyright, there was no need to add the copyright notice on a daily basis, only when we published it and that is when we did it.

1774

Q. So what is the latest version that you published, quote published, unquote?

A. UnixWare 714.

Q. So there is a 714 version of the source code for UnixWare?

A. Well, there certainly is, yes.

Q. That you have gone in and you have added SCO copyright notices to the portions that you have modified, correct?

A. Well, I don't -- I don't recall that we actually issued a source code product for UnixWare 714. If we issued a source code product for 714, then we added a copyright notice on every file since we own the source to all of the source to the source to UnixWare.

Q. Let's go back to 1995 and 1996. In your testimony on direct with Mr. Normand, you explained that the copyright notice was changed in UnixWare 2.1; correct?

A. Yes.

Q. And that was the then current version that Santa Cruz was going to release after the asset purchase agreement?

A. Yes.

Q. You did not go back and change the copyright notices at that point in time as to UnixWare 2.0, UnixWare 1.0, SVRX -- no, sorry, System V Release 4.2MP; correct?

1775

A. No, we didn't. These products were already done and dusted. They were on the manufacturing shelf, masters were available to be duplicated. It was our understanding that we could continue to ship those products with copyright notices as they existed in those products at the time that these were mastered. It was our understanding that the actual establishment of the ownership of the copyright in those codes was established by the legal agreements, not the notices, notices that existed in those old products.

Q. All right. So it just didn't seem that important at the time to adjust the copyright notices in the older versions of UNIX or UnixWare because the agreement was controlling, correct?

A. That was our understanding at the time.

Q. And that --

A. Continues to be my understanding.

Q. Okay, perfect. So let me ask you -- ask you about the tree and the trunk of the tree and let's see if we can help the jury understand how this works.

I am not a very good drawer -- artist, Mr. Nagle, but I hope this serves the purpose. So I think you were explaining that UnixWare System V and, in particular, this last System V release, 4.2MP, was the guts of UnixWare, correct?

A. And 4.2MP was the basis for UnixWare 2 and

1776

UnixWare 2.1. For UnixWare 1, it was System V release 4.2.

Q. And in UnixWare, there is some other -- importantly there is some other components that are NetWare components, correct?

A. There are NetWare components in UnixWare 2, there were fewer. In UnixWare 2.1, there were more that were introduced.

Q. And then ultimately, just to avoid any confusion, there was an agreement between Santa Cruz and Novell some years later that meant that NetWare didn't need to be included any longer, correct?

A. I was not party to that, but I did hear about it.

Q. But in the relevant time period that we're focusing on here around the time of the asset purchase agreement, UnixWare consists of UNIX System V code, specifically UnixWare 2.1 consists of System V code, some NetWare code, some additional code for the UnixWare release that has been written or is being written as of the time of the asset purchase agreement, correct?

A. Yes. If it -- yes, it includes at least that. There were other -- there was other third-party code that was a part of SVR 4.2MP. NetWare is not the only third-party that had code in the UnixWare base.

Q. And can the jury see my wonderful art work? Great. In particular, what we were focusing on was UnixWare

1777

2.1 in your direct testimony, correct?

A. Yes.

Q. And that got a copyright Santa Cruz notice, correct?

A. Yes.

Q. Now, UnixWare was a flavor of UNIX, correct?

A. Yes.

Q. And there were other flavors of UNIX such as IBM AIX, HP UX, correct?

A. Yes.

Q. There are -- I think I heard somewhere that there are thousands of flavors; is that correct?

A. I can't confirm or deny. I wouldn't be surprised, I guess.

Q. There are many?

A. There are many.

Q. So on the would you be surprised line of questioning, would it surprise you if IBM had registered copyrights to its AIX flavor of UNIX?

A. No.

Q. Would it surprise you if IBM were to distribute say a CD, if they were in that business with AIX? It used to be out so I could hold it up.

MR. NORMAND: The witness has it.

Q. (By Mr. Jacobs) If they were to distribute a CD

1778

and put an IBM copyright notice on their CD of the AIX?

A. My understanding of the purpose of a copyright notice on the front of a product box is that it says to the customer that purchases that product if you have any questions about the copyrights on this -- in this product, you come to me to see -- to get your answers. Um, it makes no claim, as far as I know, to assert that the copyright notice on the front of the box overrides the legal agreements that establish copyright ownership.

Q. So if there was a copyright IBM or copyright registration by IBM on AIX, it wouldn't answer the question who owns UNIX System V, correct?

A. It would not.

Q. In fact, you would not understand it -- you would not understand IBM to be making a claim of ownership of UNIX System V merely by putting a copyright notice on the box of AIX?

A. Um, I would not. I would assume that they would respect the legal ownership of the underlying copyrights as established by the appropriate agreements.

MR. JACOBS: I have no further questions, sir.

THE COURT: Mr. Normand?

REDIRECT EXAMINATION

BY MR. NORMAND:

Q. Mr. Calvin, could you pull up C14 and then could

1779

you pull up the middle paragraph for the witness and the jury.

Mr. Nagle, do you recall being asked about UnitedLinux?

A. I do.

Q. Do you see the line five or six lines down that says, "SCO, which owns the copyright to UNIX"?

A. I do.

Q. Is that statement consistent with your understanding of SCO's ownership rights and Linux copyright?

A. Yes, it is.

Q. Did members of UnitedLinux ask SCO to contribute UNIX intellectual property to the undertaking?

A. They did. They did during the negotiation of the agreements, and the CEO of Caldera, Ransom Love at time, declined. There was a very short specific list of technology that each of the companies contributed to the consortium. We did contribute some, but none of it was the core technology that was driving the revenues for our company at the time.

Q. Was Novell a member of UnitedLinux?

A. Only after they purchased SuSE.

Q. And before that time, did anyone ask Novell to contribute any UNIX intellectual property to the undertaking?

1780

A. No.

Q. Do you recall being asked some questions about changes that were made to copyright notices in 1995?

A. Yes.

Q. Did Novell change the copyright notices on their existing version of UnixWare even before SCO had made any changes to it?

A. No. Because the changes in copyrights were always done in the last month prior to ship.

Q. And is it your understanding today, that Novell engineers in 1995 changed copyright notices on UNIX code that Novell is now claiming to own copyrights to?

A. Yes, that is my understanding.

Q. And you directed that undertaking, that the engineers would make those changes, you were part of that?

A. I was part of the team that directed that undertaking. I was -- at the time I was a Novell employee.

Q. Now you were shown the trunk of a tree and asked about thousands of UNIX flavors. Do you recall that?

A. I do.

Q. Let me compete with Mr. Jacobs on terrible drawings. It is all right, Mr. Jacobs. You will recall questions I asked you about the relationship between UnixWare, your earlier versions, and the previous version of UNIX which I think you said was 4.2MP; is that right?

1781

A. UnixWare 2 is derived from 4.2MP, that is correct.

Q. Now, I know you probably can't quantify it, but how close are those two products in terms of overlapping source code?

A. Very, very close. Over 90, 95 percent.

Q. And you saw that Mr. Jacobs had put up a trunk and then a branch. Do you recall that?

A. Yes.

Q. And the trunk was System V?

A. Yes.

Q. And the branch over here was UnixWare?

A. Yes.

Q. Do you recall that?

A. Yes.

Q. Do you think that is a fair description of the relationship between System V and UnixWare?

A. No. I think you would have to recognize that System V reached into all of the branches of that tree that he drew and into many others.

Q. Now, we have confirmed that is a terrible drawing. However, do you see the reference in the middle circle the SVR5 and UNIX System V 4.2MP?

A. I do.

Q. And you see that I have attempted to draw a

1782

circle around that and I have labeled that UnixWare?

A. If you would label that 2.0, we're slightly more precise.

Q. Okay. And do you think that this would be an accurate depiction of the relationship between UnixWare and the prior version of the UNIX System V 4.2MP?

A. To a first approximation I would say yes, close.

Q. When you say to a first approximation, just explain to the jury why you think to a first approximation this is accurate? What does this represent?

A. Um, System V release 4.2MP was a release of UNIX that was under development prior to the acquisition of the UNIX business by Novell. We were, at the time, we were UNIX System Labs, we went through a lot of company name changes, um, and we had developed a version of UNIX that we labeled System V release 4.2 and we were intending to go to market with that as a binary product and at the time we saw our chief competitor to be The Santa Cruz Operation. That was then seized on by Novell as they took control of the company assets and they said well we want to go to market with this under a different brand. We want to go to market with this as UnixWare 1.

Q. Now Mr. Nagle --

A. Yeah.

Q. -- in terms of this relationship between these

1783

products, let me just ask you this. If Novell owned the copyrights to the System V, and they could do whatever they wanted with all of these copyrights to System V, the old version of UNIX, what would be left of UnixWare?

A. Well, very little.

Q. Would it work?

A. It wouldn't work.

Q. Why wouldn't it work?

A. It would be -- it would be the equivalent of having purchased a car from someone and then years later they come to your front door and say give me the engine for my car. The engine to UNIX is the kernel, it is the core of the operating system that actually talks to the hardware. That it tells how to reach into memory, how to -- how to read or write from the disk. All of that technology, the basis for that technology, reaches back to the development of 4.2MP that was done at UNIX System Laboratories. It was brought forward into UnixWare 2, it was brought forward into UnixWare 2.1 and it is still there.

Q. Is it true that if you took the old UNIX pre-1995 UNIX out of UnixWare 7?

A. It wouldn't work.

MR. NORMAND: No further questions, Your Honor. // //

1784

RECROSS-EXAMINATION

BY MR. JACOBS:

Q. Mr. Nagle, Mr. Normand asked you about copyright ownership and then switched to taking the code out of UnixWare, taking the System V code out of UnixWare?

A. Yes.

Q. Did you understand that copyright ownership means take the code out?

A. Copyright ownership confers the right to do with the code whatever the copyright owner chooses to do with code. And therefore they would have the right to direct somebody that is using the code to do whatever they want with it.

Q. SCO claims to own the UNIX System V copyrights. Does that mean SCO has the right to tell HP take out the System V code from your product?

A. SCO has a license agreement with HP that sets the terms under which HP can use that code. And so long as HP is in conformance with this license, then the rights that SCO has to direct HP to do anything are quite limited.

Q. You're aware that SCO issued a press release in 2007 in which it said, even if we don't own the copyrights, we're fine with our existing products and they can go -- we can continue to support them, made a securities filing to that effect?

1785

A. Um --

MR. NORMAND: Your Honor, this is beyond the scope.

THE WITNESS: I don't remember -- well --

Q. (By Mr. Jacobs) You're not familiar with that?

A. I'm not familiar with it.

Q. And you do know that the asset purchase agreement has a lot -- has a number of provisions governing what Santa Cruz was to do with the code such as the development of the AIX product, the development of UnixWare 2.1, correct?

A. Yes.

MR. JACOBS: Okay. Thank you, sir.

THE COURT: May this witness be excused?

MR. NORMAND: Yes, he may.

THE COURT: Mr. Jacobs?

MR. JACOBS: I'm sorry. Yes, Your Honor.

THE COURT: All right. Mr. Nagle, that means you do not need to worry about being recalled, but I would instruct you not to discuss your testimony with any other witnesses in this case or in the presence of any other witness nor communicate your testimony in any way to anyone else. All right?

THE WITNESS: Thank you.

THE COURT: Thank you very much. Ladies and gentlemen, we will recess for the weekend. Because of its importance, I'm going to again read to you the instruction

1786

that was given to you at the very beginning of this case.

First, I instruct you that during the trial you are not to discuss the case with anyone, including fellow jurors, or permit anyone to discuss it with you. Until you retire to the jury room at the end of the case to deliberate on your verdict, you simply are not to talk about this case. Not talking about this case means not talking about it in anyway including by internet, e-mail, text message and instant communication devices or services such as cell phones, blackberries, I-phones or social networking websites including Facebook, Twitter, et cetera.

Second, you are not to read or listen to anything touching on this case in any way. Do not watch or listen to any news reports concerning this trial on television or on the radio. Do not read any news accounts of this trial in the newspaper or on the internet or on any instant communication device including, again, Facebook, Twitter and so on. If anyone should try to talk to you about it, bring it to my attention immediately.

Third, do not do any research or make any investigation about the case on your own. Specifically yesterday you were instructed to that and that means that are you not to be doing Googleing or anything of that sort, any type of research on your own regarding this case.

And finally, though you have now heard two weeks of

1787

evidence, the bulk of the plaintiff's case has now been presented. It would be inappropriate, unwise and wrong for any of you to be making up your mind. You have yet to hear the remainder of the plaintiff's case, you have yet to hear the defendant's case. And most importantly, you have yet to be instructed on the law that you are required to apply to the facts that you have been hearing over the last two weeks.

So endure another week. When have heard everything, when you have been instructed and you have heard the closing arguments, you begin your deliberations, and then and only then should you be making up your mind about this case.

I sincerely hope you have a nice weekend. And we'll see you here Monday morning at 8:30. Ms. Malley.

THE CLERK: All rise for the jury, please.

(Whereupon, the jury left the courtroom.)

THE COURT: Do you have anything before we recess?

MR. BRENNAN: Not from Novell, Your Honor.

MR. SINGER: Not from us, Your Honor.

THE COURT: I hope all of you have a nice weekend also. We do have hearings this afternoon, so if you would please clear the desks.

MR. SINGER: We will.

(Whereupon, court adjourned for the day. The trial

will resume on Monday, March 22, 2010 at 8:30 a.m.)

1788


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )