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Day 9 of the SCO v. Novell Trial, March 18, 2010, Part 2 - The Jury Gets to Learn About Earlier SCO Losses in Court
Sunday, October 10 2010 @ 11:57 PM EDT

Let's continue with the second part of the events of Day 9 at the second SCO v. Novell trial, before the Hon. Ted Stewart, a continuation of this article, part 1, where you'll find the complete transcript as text. We ran out of space, so you may want to open up the previous article alongside this one, so you can follow along with the transcript.

So we're still talking about the events on March 18, 2010. When we left off, Dr. Christine Botosan was on the stand, enduring cross examination by Novell's lawyer, Sterling Brennan. I do mean enduring, because she was very much on the defensive, and as you will see, it gets worse for her.

We'll pick up the narrative right after the court has taken a break. When the judge returns, but before the jury is brought back, he brings up again his decision to let Novell mention the previous Judge Dale Kimball rulings against SCO in this case. SCO in its appeal is claiming it was error to let the jury hear about all that, so let's focus on that part especially.

Here's the discussion right after the break:

THE COURT: Mr. Brennan, I do want to add some clarification to my ruling allowing you to question this witness about the prior court decisions of Judge Kimball. I want to make it clear to you that it is based upon your representation to the Court that you can prove its relevance through Dr. Botosan's analysis. If the Court deems that you simply have raised the existence of those prior court decisions in an effort to bring it to the jury's attention without it being relevant at all, in other words, if you ask her about them and she convincingly explains why it is totally irrelevant to her analysis, then the Court will deem that to be an unwise decision on your part.

I am assuming, based upon your representation to the Court, both in the written memorandum and also what you said her today, that you fully expect that it is something that she should have considered and that she should have been aware of and is relevant to her analysis. Again, if it proves otherwise, I think that is a risk and the Court is going to have to entertain some type of motion from SCO in regard to that. Okay.

MR. BRENNAN: Thank you, Your Honor.

Just so we are clear, I don't know what her answer will be in advance for my questions.

THE COURT: And I don't want her being advised of this discussion, and that is why I asked her to leave the courtroom. I don't want her back there being primed to respond in a certain way. I just need you to understand, all of you, that I do deem the raising of the issue with the jury, the prior court decisions, to be something that is really unnecessary as a general rule. Not just unnecessary, but highly prejudicial. I am willing to grant you that you believe that you can establish that her analysis is defective and significantly because she did not consider these decisions. I want to give you that opportunity.

MR. BRENNAN: Thank you, Your Honor.

THE COURT: I do want to state also to all of you, that because the door has been opened with this witness, that that does not mean that it ought to be raised again with any other witnesses, unless this Court gives you permission to do so.

I want to add also that in instructing the jury, what I intend to say is SCO appealed the District Court rulings that we have heard about. The Court of Appeals reversed those decisions, meaning that they found them to be without merit, and determined that a jury should decide the issues in this case. I believe that using the phrase reversed will not be meaningful to the jury unless I add that.

All right, counsel.

I also have to add, Mr. Brennan, that the jury was really struggling there towards the end. You perhaps are not watching that, but I thought you ought to be aware of the Court's observance.

MR. BRENNAN: Thank you.

MR. HATCH: Consistent with what you have been saying, I noticed that Mr. Brennan, and I was trying to watch it very closely, he is bringing up some things that Dr. Botosan looked at in her report, but the report covered two areas, one of which is not at issue in this trial. I want the Court to be very cognisant of any kind of bootstrapping of any kind of opinions that were not offered in this trial as a way to get the prior opinion in.

MR. BRENNAN: Your Honor, just to comment on that, first of all, as I understand what transpired here --

THE COURT: Ladies and gentlemen, you may sit down. You don't have to be standing.

MR. BRENNAN: Dr. Botosan was proffered prior to her testimony for two purposes. One was a causation analysis and an event study, and the second one was the lost profits damages analysis. It is when we I think did the courtesy to SCO Group, and mindful of the Court's desire not to be surprised, that we said if you pursue the event study we think that is one of two pathways by which you have opened the door. The SCO Group strategically decided to withdraw the proffering of that testimony. I did not understand that was by court order. They made a strategic decision simply not to put a witness up to testify on a certain subject.

THE COURT: That is my understanding as well.

MR. BRENNAN: That in mind, given the fact that she is an expert and she testified to it, but I did not understand, nor would I have understood, that that meant that I couldn't ask any questions about it.

THE COURT: About that testimony that they withdrew?

MR. BRENNAN: Simply because they chose not to ask the witness about it. It is in her report.

During the course of the proceedings this morning I asked the question, did you reach conclusions in your report that your attorneys asked you not to present? I do not believe that the subject matter was privileged and it was not subject to an evidentiary ruling.

THE COURT: Do you intend to pursue that further?

MR. BRENNAN: I don't. The objection was sustained. The reason I raise this is if there is some suggestion that we engaged in some impropriety in asking a witness about testimony that her attorneys chose not to examine her about, I would not have believed or understood that to have been off bounds simply for me to ask her about that.

THE COURT: You don't intend to pursue that further?

MR. BRENNAN: I don't.

THE COURT: I don't think there was anything untoward about your question, but I was afraid that you were going to go perhaps down that path, and had it gone any further I think I would have to have sustained an objection to that.

MR. BRENNAN: Yes. In fact, you did sustain the objection to that question.

I suppose the other point I just want to alert the Court to is this, that during the examination we have had of Dr. Botosan so far, without at this juncture asking her specifically about the rulings, and I did ask her whether or not rulings and decisions in this case were broadly disseminated, which she said she would except so, and I asked whether or not they would have an impact on potential licensees of the SCOsource program. She said yes to that.

THE COURT: In the real world.

MR. BRENNAN: In the real world.

THE COURT: This is my dilemma. You have to, somehow or other, have to draw her away from her but-for world, that she testified on, to the real world. That is what I'm trying to warn you about. There has to be that connection in order for her testimony on the court decisions to be relevant. You just can't say I want you to throw out everything that you did in your but-for world, and now answer all my questions about the real world, unless you're able somehow to draw the connection between the two. That is what Mr. Singer was arguing about earlier this morning. I am basing my ruling on the presumption that somehow or other that is a relevant line of questioning.

MR. BRENNAN: And my suggestion, because I don't want there to be an unnecessary problem with Novell and the Court on this, is because an expert witness comes in and says I have created a construct, a but-for world, that that insulates them from examination regarding the real world. The mere fact that they have chosen a device, the so-called but-for world, because I think Your Honor what she may say, and I don't know this, but anything that you ask me about the real world is different than the but-for world and thereby it is somehow irrelevant.

I think the unfairness of that is it impedes our ability to conduct an appropriate cross-examination, to impeach the witness, and to draw conclusions that might be different were the jury to focus on the real world. The reason I raise that is I don't want to be crosswise with the Court on this.

THE COURT: No.

Again, I want to give you leeway because I realize the importance of this testimony, but the dilemma I would have, if you continue to question her about the real world, and she simply responds over and over again that I did not consider that, it is not relevant to my analysis, so that you end up with a bunch of questions to which there is no response, and I would think that would be highly prejudicial. I don't quite know how to suggest to you that you approach this, but that to me, as I say, would be -- if she is in effect going to say I have not considered that, because I worked within my little world of but-for, the construct that I was given, and the rest of this stuff I have never even thought about, what will be the value of that?

MR. BRENNAN: Well, two responses.

First of all, Your Honor, I also was very careful to ask her so far, and I apologize if it wasn't scintillating testimony, what did you look at? I read to her specifically from her report where she said I reviewed the motion for summary judgment filed by Novell.

THE COURT: The question may be, yes, she may have reviewed it, but did she consider it in her but-for world? That would be the relevant question.

MR. BRENNAN: Let me assume for purposes of discussion, because I don't know what her answer will be, that she were to say no, and I believe that it would be of value to the jury to actually draw a contrast between real world developments involving real world licensees and her but-for world. That is the fundamental purpose of the cross-examination.

THE COURT: I think that is a legitimate point that you can make.

MR. BRENNAN: That is the point that I do intend to make, Your Honor.

Just so we are clear, I don't know what she will say. My expectation, frankly, is that she will answer the questions as the Court may suspect. Whenever I ask about a whole host of these matters she will say but I was in a but-for world, and I'll want to draw the comparison between the but-for world and the real world. We got a taste of that, for example, Your Honor, and I was just about to show her that the Deutsche Bank report is a real world study, where it specifically states that if SCO does not succeed in its litigation against I.B.M., it will have to close its doors. It will fail.

So what I want to among other things show the jury, is that the very report that she is relying upon, and I asked her about did you cherry pick matters out, and that the analysis is a litigation analysis. It is a study of whether or not an investor should engage in what they refer to as a binary decision, that either this company will fail or succeed based on the outcome of the litigation. They say in the report this is kind of a wild shot. If you want to take a risky investment and ride it up and you do well, but if they don't succeed, it fails. That is the context by which she has drawn her analysis.

If what she is going to do is say, well, yeah, that is what the Deutsche Bank report says, and it is called on its surface, on its face a call to arms, and Deutsche Bank calls this a litigation strategy. Is she going to say, well, no, I want to parse that. I want to divorce myself from those considerations. Then she is stepping away from the very analysis. That is the first point.

The second point, and I apologize for going on, but I just want the record to be clear, is that I want to be able to do the very thing I have suggested to the Court, and that is draw a very clear line of demarcation between her very narrow construction by which she is suggesting the jury should award $250 million in damages, and a very real world where people are making much different decisions real time before she even submitted her report.

THE COURT: Thank you.

MR. BRENNAN: Thank you, Your Honor.

MR. HATCH: The problem with what Mr. Brennan is saying is, one, he is ignoring the 403 issues here. He is bootstrapping because he even talks about the Deutsche Bank report. That report was before the slander suit. He is bringing in issues and trying to bring in court decisions in this case that didn't exist when those reports were being done. As Mr. Singer said today, the but-for world here is that SCO owned the copyrights and Novell had never asserted that they thought they did and then go out and slander our client. That is the world. He wants to confuse the two. That is highly prejudicial, Your Honor.

THE COURT: Counsel, the Court believes that to the extent that Mr. Brennan wants to undermine the but-for world with the real world, the Court has to allow him to do so.

MR. HATCH: Should that be done with a proffer outside of the presence of the jury, before he connects it up and --

THE COURT: I will just rely on you to make objections to the questions asked. All right.

MR. BRENNAN: Thank you, Your Honor.

The operative sentence from Judge Stewart, I believe, would be this one:
THE COURT: Counsel, the Court believes that to the extent that Mr. Brennan wants to undermine the but-for world with the real world, the Court has to allow him to do so.
"Has to" in the sense that it's normal that the other side gets to try to show your expert got things wrong. The reason the judge allowed the jury to hear about the real-world events, like SCO's loss at the first trial, was to give Novell the opportunity to show that SCO's expert got her facts, her method of figuring, or her calculations wrong. SCO in its appeal wrote this instead:
In the second week of trial, however, the court decided to permit Novell to quote from the prior decisions in cross-examining Dr. Christine Botosan, SCO’s damages expert, on the theory that the decisions pertained to the “but for” world of Dr. Botosan’s damages model.
The judge didn't so much think the real world was "relevant" to the but-for world; rather he insisted that it had better be or he'd cut off the questioning, that he was assuming Brennan would demonstrate relevance, and that he thought Novell had the right to show that the but-for world wasn't accurately drawn.

But it was relevant. Remember Brennan pointed out that she relied on analysts' reports for her calculations, which were based on projections from litigation winnings (plus folks signing up out of fear of litigation), so her but-for world was selective, and it included both but-for and real-world elements, combined together already, and that gave Novell the right to try to punch holes in her constructed universe, to undermine it by showing more real-world events she didn't factor in and should have. That's how I understand this discussion, anyway. And by the way, on page 24 of her report, p. 27 of the PDF, she provides a list of documents she considered "in forming [her] opinions", including the Deutsche Bank report. And we know she testified that her figure of $100-$300 per SCOsource license, as used in her but-for world, came from the Deutsche Bank report, so she did use the real world to some extent in her but-for world math. Here's one part of that testimony:

A So here I relied on Deutsche Bank for those two numbers, and then my growth assumption of zero percent.

Q All right. So the ultimate number you got there was how much? What was that?

A 149 million.

Q Did you consider that, like on the vendor licenses, to be a conservative or an aggressive, optimistic number?

A So I considered that number to be conservative as well. I've already indicated that I felt that the growth rate that I was assuming was conservative. But I had other evidence that provided me with comfort that this was -- this was a reasonable number as well. In the Deutsche Bank forecast, what sort of underlies these two numbers, because these two numbers came from the Deutsche Bank forecast, is an assumption that what SCO was going to be able to do was sell 650,000 licenses at $100 a piece.

And then on her second day on the stand, she said this:
Q. Now, were there any other risk factors that you took into account other than the four that you have just mentioned?

A. There was also some discussion in some of the analyst reports about the possibility of some customers saying we don't want to buy a SCOsource license, and instead we're going to switch, but the analysts generally felt that that was a pretty low probability. Then there was also some discussion about, you know, potentially a design around, but that also didn't get much traction.

Q. What do you mean it didn't get much traction?

A. I mean that the analysts didn't seem to feel like that was as important a market condition as, for example, that infringement was in question.

Q. Did you also take into account the notion that there was something called the G.P.L. or the general public license?

A. That was also discussed in the Deutsche Bank report.

Q. Did you take that into account in your analysis?

A. Well, since I used the Deutsche Bank forecasts, it is incorporated, yes.

So it was really Dr. Botosan who introduced the real world here, and she used real-world elements to create her but-for world. She discounted some of them, because analysts had, but she did take them into account, she testifies. It wasn't actually Novell, then, who first introduced the real world. She did it herself. Novell just walked through the opened door and mentioned other real-world events that she should have factored in. Obviously the fact that a judge had ruled that SCO didn't own the copyrights it was threatening Linux end users over would impact how many Linux end users would be interested in a SCOsource license to protect them from potential SCO litigation over those same copyrights it had been found not to own.

Duh.

There was another interchange about how she did her figures:

Q. And just so we're clear here, what you have done is suggested that because SCO entered into these two license agreements, one with Microsoft and one with Sun Microsystems for an amount combined in about the range of $27,000,000, right?

A. Roughly.

Q. That that was the basis for projections for the future, right?

A. No.

Q. Well, isn't that what Deutsche Bank based its projections on?

A. No.

Well, I can't speak about Deutsche Bank, but we know Renaissance Research Group surely did base its projections on that, because in her report, Dr. Botosan told us so:
32. On January 22, 2003 SCO formally announced its SCOsource initiative.32 Shortly thereafter, on February 25, 2003 SCO and Sun signed a vendor license agreement that generated $10 million of SCOsource vendor license revenues. Based on this early success, an independent analyst at the Renaissance Research Group (RRG) revised a forecast related to SCO that he had issued earlier on February 24, 2003. In the earlier February forecast, the RRG analyst forecasted SCOsource vendor license revenues of $2 million dollars per year, but in his revised forecast dated March 6, 2003, he increased his revenue forecast to $10 million per year.33 The analyst noted that during SCO's February 26, 2003 quarterly earnings conference call, management had announced $10 million in revenue from its SCOsource licensing initiative.
That certainly sounds to me like they based their calculations on the Sun license agreement.

So Brennan begins to ask her questions, and as predicted she says that the real world doesn't enter the but-for analysis. So up pops Brent Hatch for SCO, as he's been delegated the one to present objections, and he objects, but notice how he puts ... I was going to say some spin on the ball, but it's more like a spitball:

MR. HATCH: Your Honor, Mr. Brennan said he was going to lay a foundation. She has made it eminently clear this has nothing to do with her calculation. Now he is just wanting to read into it the record, you know, things that don't matter to her analysis. I don't think he has any business going into it. Secondly, I think a curative instruction to the jury would also include that the judge was found in error and has been removed from the case and a new case --

THE COURT: He was not removed. He chose to recuse.

MR. HATCH: He recused himself.

MR. BRENNAN: Under the Federal Rules the case would have come back to him but for the decision to recuse himself.

THE COURT: Well, if we do anything of that sort, we'll do it in a final jury instruction and not at this point.

MR. BRENNAN: Your Honor, just so we're clear, I will do the same that I did on the prior line of questioning, no more, no less. And it is for all of the reasons that we have identified.

MR. HATCH: He is reading from documents. He hasn't laid any foundation for it. She indicated it had nothing to do with her analysis. You know, she is trying to deal with the real world, trying to do his analysis rather than hers.

THE COURT: You're now going to go to the 2007 summary judgment?

MR. BRENNAN: Yes.

THE COURT: Remind me again when it was issued?

MR. BRENNAN: It was issued on August 10th, 2007. That is within the damage period that they're claiming. That is why it is important.

MR. HATCH: They have taken that into account, her damages in the but for world, and they're trying to put something in it that she doesn't consider that the but for world is if none of this happened. He is now trying to put this in and she says no. We shouldn't go any further than this. He shouldn't be able to read into evidence what he says he can't get out of her. It is not part of it. But to sit and read, you know, read in language from the decisions that is -- that is simply 403 and it is not probative.

THE COURT: Go ahead, Mr. Brennan.

MR. BRENNAN: Briefly, Your Honor, because I think I have made most of these points previously. We have heard in the last line of questioning that she mixed and matched real world with the but for world. So it is not a pure artificial world that she is suggesting it has been represented. And in addition, this opinion was issued during the damages period and, in fact, if we look over at that chart, The SCO Group is seeking in excess of $50,000,000 in damages for 2007 alone. And the suggestion has been that parties would continue through 2007 to acquire SCO source licenses, both RTU and vendor licenses, at a rate in excess of $50,000,000 in 2007. Clearly, the fact that Judge Kimball issued a decision granting summary judgment would have an impact on those damage calculations. We didn't put them at issue, they did.

MR. HATCH: Couldn't possibly in any way, given her calculations, they don't exist. He hasn't laid any foundation that those decisions are anywhere in that number.

THE COURT: He has laid the foundation that at least the Deutsche Bank Report relies on conclusions about the real world. And I do believe that those real world conditions that they rely upon are often considered by the jury. The dilemma is whether or not these specific court rulings were relied upon by that report.

Go ahead, Mr. Singer.

MR. SINGER: If I might address this, Your Honor. The Deutsche Bank Report was in October of 2003. It is contemplating certain litigation, IBM litigation, perhaps other litigation, as being risk factors. This case is January 2004. There is nothing to do with the Deutsche Bank Report. The assumptions of the Deutsche Bank Report are fair game, but they have nothing to do with this decision or any decisions in this case which are reactions to the public announcement in December 22, 2003, republishing the claim of slander which led to the January 2004 filing of this lawsuit and all of the decisions that followed. There is not one word in the Deutsche Bank Report that relates to this case which is on the slander of title.

THE COURT: Mr. Brennan, the court is going to require of you additional foundation to establish that the Deutsche Bank Report contemplated if not these specific rulings at least rulings similar to this, all right?

MR. BRENNAN: Okay.

THE COURT: It is based on the court's assumption that as you pointed out she has relied on that real world report. Again, if the foundation can be laid that this was the type of lawsuit and the potential rulings that you are referring to would be a possible result of that lawsuit, then I believe I have to allow the testimony to proceed. But only because of that connection. But you have got to lay more foundation for that. If you cannot, I will sustain the objection. And I don't want you reading anything from the 2007 summary judgment decision until the court has ruled there has been proper foundation laid.

MR. BRENNAN: Very well, Your Honor. Thank you.

Imagine if this judge didn't know that Judge Kimball chose to recuse himself. How could Hatch present it in such a negative, inappropriately censorious way? It is not true what he tried to say. Judge Kimball was not removed from the case. But Hatch said it.

From day one has that not been the SCO calling card, smearing honorable people -- beginning with Linus Torvalds and now all the way through to Hatch smearing the Hon. Dale Kimball -- who do not at all deserve it? I so despise such tactics. Let's hope he was momentarily confused as opposed to trying to confuse.

But as to the substance, you can see SCO's position from what Stuart Singer says most clearly. They are saying that in constructing Dr. Botosan's but-for world, she included only those things that would have happened even if Novell had never said a word about owning copyrights and there had never been any SCO v. Novell litigation. That never happened in the but-for world of hers, so those events have nothing to do with the analysis she did.

Novell on the other side is saying that she already brought the real world into her but-for world by relying on the Deutsche Bank report and others that talked on and on about the litigation risks when doing the very financial projections that she used. So removing all mention of those elements would be unfair to Novell. SCO brought it up in the first place; Novell should be allowed to undermine the but-for world's real-life elements and how she used them. If she selected only real-world events that support SCO's position, surely Novell would get to point that out.

And as I wrote in the previous article, part 1, one of the litigation risks, aside from the SCO v. IBM case, is the Red Hat case against SCO. That case certainly had to have an impact on people considering a SCOsource license, because Red Hat loudly proclaimed by its complaint that SCOsource was essentially a scam.

And yet another important real-life event was the decision on August 10, 2007, when Judge Kimball ruled that SCO didn't get the copyrights from Novell, among other things. Obviously that would impact how many SCOsource licenses would get sold. And the date puts it within the window of the damages calculations Botosan did.

Botosan has been telling the jury, after all, that it is only Novell's statements about copyright ownership that negatively impacted the public's willingness to buy a license from SCO. And for sure her calculations assumed it. Novell wants a chance to show that there were many other reasons that even in a but-for world would work against SCOsource sales.

Judge Stewart listens to both sides, but then he allows Brennan to continue the questioning and to introduce the Kimball ruling. First though, as instructed, he turns to the Deutsche Bank report, to lay a better foundation. He reads from a subheading, "How SCO Got UNIX: A chronology of System V ownership," which states, "In addition to its work with the OpenServer, SCO acquired all right, title and interest in and to the UNIX Software Code. After AT&T sold UNIX to Novell in 1993, Novell renamed UNIX UnixWare. In 1995, SCO acquired the UNIX software designed for the Intel processor as well as UnixWare from Novell. In acquiring UNIX from Novell, SCO acquired the licensing agreements for the UNIX OS software source code, object code, and related schematics, documentation, derivative works, and the sale of binary and source code licenses. It is this acquisition that is at the heart of SCO's lawsuit with IBM."

I'd like to point out that this is inaccurate, that SCO renamed UNIX UnixWare. UnixWare and Unix were and are two separate names for two different products. May I just point out that Unix is a trademark that doesn't belong to SCO? It belongs to X/Open, and they don't call Unix UnixWare. SCO named a product it was selling UnixWare. SCO lacked authority to rename UNIX.

If you go the the US Copyright Office, you'll find copyrights for UNIX and copyrights for UnixWare, two entirely separate sets of copyrights. Or examine them here on Groklaw, the ones at issue in the SCO litigation. The "Ware" part of the name UnixWare means there is more in that product than just UNIX. That's just the kernel. You know, like GNU/Linux, with Linux just the kernel.

A lot of folks, including analysts and experts, just wrote down what SCO told them as if it were true, without checking, and it makes it a lot harder to zero in on the truth when the waters get muddied that way. I guess that's why SCO did it, because the truth doesn't much help them, and so instead they constructed a very elaborate house of cards instead, telling a narrative they liked better for their purposes. And by getting a number of others to repeat that narrative as if it were true, it enabled them to go to court with a complete narrative and folks with degrees putting their hands on the Bible and swearing it was so. That makes it quite dangerous, in that there could, I would imagine, be groups of conspirators willing to collude and plan ahead for years, with analysts and experts and journalists all bought and paid for, and them play out the scam until the jackpot falls on them from the skies. Like in a heist movie, if you will. If there are millions or billions at stake, is it inconceivable that someone at some time might come up with a heist like that?

Anyway, getting back to the testimony, Botosan chose to rely for her calculations on this report from Deutsche Bank, a company pushing SCO's stock, ignoring other analysts who presented a very different analysis of SCO's prospects. So Brennan reads a portion of this report to her. And this is where he hits the target, as he reads this from the Deutsche Bank report about the IBM litigation:

Q. Now, do you understand from reading that that both in the IBM case and in this litigation there is a question of SCO's claim of ownership to UNIX, right?

A. Well, I understand from reading that that the analysts' beliefs at the time that they were writing this was that there wasn't a question of ownership.

Q. And, in fact, there was reference made to the fact that there was going to be other related litigation regarding SCO's claims. In fact, we read earlier in the report under the risk section a specific reference by the analysts to other Linux related litigation; correct?

A. That is correct. They talked about other litigation.

Q. In fact, if we could now go to Page 7, we looked at this before, just so we're clear, Page 7, the third paragraph if we could highlight that reference to lawsuits, in the last sentence of that paragraph said, "This lawsuit is a risk and we imagine SCO could be the focus of other lawsuits." Right?

A. I see that. But I do want to make the point that not any of this is relevant to the analysis that I did. This was a risk to SCO, the company. My focus was on the SCO source revenue. That was not a risk to the SCO source revenue.

Q. Would you agree that a lawsuit filed by SCO that put into question its ownership to the UNIX copyrights would be a risk to SCO Group, Inc.?

A. Well, I think we're back to the same issue that we were at a few moments ago which is in the but for world, SCO would not have filed a lawsuit related to the ownership of the copyrights because in the but for world, Novell would not have slandered the title which means that SCO would not have had to file the lawsuit.

Q. So again, what I want to do is compare and contrast your but for world with the real world. And Your Honor, I believe that there is proper foundation laid just from what we have looked at for me to continue.

MR. HATCH: Objection, Your Honor, for the reasons we discussed before there clearly is not.

THE COURT: I'll overrule the objection. You may go ahead, Mr. Brennan.

As it happens, Deutsche Bank mentioned the risks of SCO losing the IBM litigation and other litigation, and they mentioned Novell's competing claims of ownership, so how is it she relies on this report but then subtracts those real-world elements in that very same report? She's cherry picking, in other words. If the public read that Deutsche Bank report, might they see other reasons not to take a SCOsource license, besides the competing copyright claims? I think so. The report called it a risky bet more or less.

If I may be allowed to mention it one more time, the Red Hat litigation was not dependent on any copyright claims. It happened in the real world and it also happened in the but-for world, because it had nothing to do with Novell's claims of copyright ownership. In fact, I think you could say that the only difference it might make is it would remove any defenses that SCO raised. And it's the same with the IBM case. IBM didn't ultimately care who owned the copyrights; their position was that they didn't infringe anybody's copyrights. So both cases belong in Botosan's but-for world. And both cases would make people feel they didn't need a SCOsource license, at least unless IBM and/or Red Hat lost in court.

But now I want to show you some spectacular lawyering. Watch Brennan patiently lead this witness step by step exactly where she does not want to go:

Q. Would you agree that a lawsuit filed by SCO that put into question its ownership to the UNIX copyrights would be a risk to SCO Group, Inc.?

A. Well, I think we're back to the same issue that we were at a few moments ago which is in the but for world, SCO would not have filed a lawsuit related to the ownership of the copyrights because in the but for world, Novell would not have slandered the title which means that SCO would not have had to file the lawsuit.

Q. So again, what I want to do is compare and contrast your but for world with the real world. And Your Honor, I believe that there is proper foundation laid just from what we have looked at for me to continue.

MR. HATCH: Objection, Your Honor, for the reasons we discussed before there clearly is not.

THE COURT: I'll overrule the objection. You may go ahead, Mr. Brennan.

Q. (By Mr. Brennan) Now, we had talked earlier about your having read Novell's motion for summary judgment in this very case and you had a chance to review Novell's legal arguments by reading that motion, right?

A. Yes.

Q. And, in fact, you were interested in the real world in 2007 because that is why you relied upon Novell's motion for summary judgment in this case, right?

A. Um, it is important to be cognizant of, you know, of everything that has gone on. But it doesn't necessarily mean that it is going to get incorporated into my damages estimate.

Q. So you felt that it was important to be cognizant of what was really going on in the real world, but you chose not to include it in your damages analysis, right?

A. No, that mischaracterizes what I just said.

Q. I'm sorry, maybe I misunderstood you. Let's take it one piece at a time. You believed, in forming your conclusions, that it would be important to be cognizant of what was going on in the real world, right?

A. True.

Q. And you believe that one of the things that you ought to be cognizant of were actual developments in the real world regarding litigation over SCO's claim that it had been slandered in terms of its claim of right to UNIX, right?

A. I think it is important for me to be knowledgeable about what is going on in the case, correct.

Q. And you likewise would believe it would be important for the jury to have that same knowledge that you sought after, right?

A. Um, that I am -- that is up to the judge.

Q. Fair enough.

A. That is not up to me.

Q. You believe that people in the real world who are considering acquiring licenses would have an interest in a legal determination as to whether or not Novell had transferred the copyrights, correct?

A. But now you're getting back into damages and the damages are not computed assuming the real world. The damages are computed assuming the but for world. So now you're mixing things up again.

Q. Well, so that I don't mix anything up, I want to be clear I'm in the real world right now. And I would like to show you a document issued by this court, Judge Kimball, dated August 10th, 2007. It is entitled Memorandum Decision and Order. And I'm going to represent to you that this decision was issued by the District Court in ruling on Novell's motion for summary judgment that you said you had reviewed.

MR. HATCH: Your Honor, I'm going to object to this. He hasn't tied this to her report or her damages study.

THE COURT: The objection is noted but will be overruled.

Q. (By Mr. Brennan) Just so we're clear, um, when you -- when you came to the jury yesterday you came up with this five year period of damages, right?

A. Correct.

Q. And your suggestion was that in 2004, for vendor license agreements, that your expectation, your projection would be that for vendor license agreements in that year alone, SCO would sell some $30,000,000 worth of vendor licenses, right?

A. I want to make sure that we're accurate. That is what I recall. But I will pull my numbers out so I have them close by.

Q. I am happy to have you confirm them. Just so you know, I'm reading from the chart that you presented yesterday.

A. Correct.

Q. And also for 2004, your projection was that there would be these right to use licenses that would generate revenue to SCO in the amount of $23,000,000 for just 2004, right?

A. Correct.

Q. And these right to use licenses again would be licenses that Linux users would buy in order to protect themselves against a copyright infringement action filed that SCO might file against them, right?

A. True.

Q. And 2004 where you have this combined total of revenues, 30,000,000 for vendor license agreements and 23,000,000 for right to use licenses, that is a total of $53,000,000 in projected revenues in an abstract world; right?

A. That is, as I said yesterday, based on my analysis, my best guess of what SCO would have generated in revenues if Novell had not interfered in the market.

Q. So your best guess is in the artificial world you have described is that SCO would have sold some $53,000,000 worth of licenses, right?

A. Correct.

Q. But in 2004 alone, we have a -- as we looked at earlier, language from a ruling by this court indicating that there were questions about copyright ownership, right?

A. But that ruling would not exist in the but for world.

Q. It would exist in the real world?

A. Yes, because Novell did something bad.

Q. Well, Novell did something bad in the real world or in your artificial world?

Is that not amazing? What can she possibly say that the jury will accept that will help SCO? He's put her in a position where in the real world, all the indications were that it was SCO that was in the wrong and Novell was absolutely justified in saying it owned the copyrights, in that it was found to be the owner of the copyrights in 2007. Here she is *assuming* that Novell did in fact say something wrong. Based on what? The assumption in her but-for world is that Novell never said anything about owning the copyrights, after all. On what basis, then, is she assuming and positing as fact that Novell did something wrong in claiming to own the copyrights, when the court said it did own them in reality? Where's the wrong?

What is wrong with saying you own the copyrights if you do, and particularly after a judge agrees that you do?

SCO wants to say, through Botosan, that even in 2007, the only factor standing between SCO and its billions was Novell's claim of ownership, but the claim was true. It does own them. How in the world can you get correct damages figures when you turn reality upside down like that?

But my point is this: This isn't inside her made up world. She is assuming that Novell did something wrong in the real one. But that is precisely what is at stake, why the trial is even happening, to determine if that is so or not. But there is no such assumption in her but-for world. In that world Novell is silent. So now she has placed her two feet solidly in the real world only.

By now, if the jury isn't asking whether this but-for world was constructed fairly, they should be. Because in any fair analysis, even in a but-for world, there were other reasons why people were not interested in getting a SCOsource license, reasons that ought to have been included in the calculations, because they existed in the real world, in the but-for world, and in Botosan's fused but-for/real-world world.

Nobody at Groklaw was interested in getting a SCOsource license under any circumstances, and that was before Novell said a word. We wrote here that we'd all stop using Linux and switch to something else before SCO would see one red cent. A lot of people felt that way. That had nothing to do with copyright ownership. If SCO owned them, we were not interested, and if it didn't we also were not interested, because we got our Linux with a license already, the GPL, and we didn't need any other, and in fact we believed that SCOsource violated the GPL, even if we went insane and actually bought one. We made a decision without any concern over who owned the copyrights.

SCO now wants the appeals court to undo this part of the case, to rule that they should have been allowed to present their make believe but-for world as if it were legitimate, without the court rulings introduced to debunk it, but what do you think? Was Novell really the *only* reason or even the most important reason why people didn't want a SCOsource license? If not, should SCO be allowed to present it that way to a jury, and Novell not be allowed to dispute it with the court rulings? Deeper, should SCO be allowed to calculate damages as if there were no such other factors?

Brennan keeps mentioning that SCO was asking for damages in the millions from Novell. But those millions couldn't be justified unless it was only Novell doing something wrong and unilaterally making it work out that way, but in the real world that isn't what happened. Why, then, should SCO get to present this arbitrarily stacked-against-Novell world and then get paid real-world dollars? It's preposterous. And deeply unjust. But that is what SCO is asking for in the appeal.

Would you like to see her answer to Brennan's question about where Novell did something bad, in the real world or in her artificial one? Here it is, and it's followed by more that the appeals court will be considering:

A. Novell did something bad in the real world and my damages are calculated assuming that Novell didn't do anything bad. I just don't understand why we're having such difficulty with this concept.
Here's what she means. Dr. Gary Pisano, SCO's other expert, told the jury the day before that he made two assumptions:
Q. What assumptions have you made about this case for the purpose of your opinion work?

A. I have made just two assumptions. The first assumption is I assume that SCO does indeed own the copyrights at issue. The second assumption I make is that there had not been any slander. So no statements by Novell, nothing like that. So that is the second assumption.

She said the same thing right afterwards, when he finished his testimony and she took the stand:
Q What were you asked to do?

A I was asked to compute the amount of damages, if any, that SCO sustained as a result of Novell's harmful acts.

Q Were you asked to make any assumptions?

A I was asked to assume that SCO did, indeed, own the copyrights. But I was also asked to assume that we were in a "but for world" where Novell did not claim ownership of those copyrights.

So in the but-for world, Novell did nothing wrong.

Botosan relied on Pisano, and both of them actually made another assumption that the real world shows was invalid, that SCO would make millions in SCOsource licenses if Novell had not said it owned the copyrights. And that assumption is what Brennan is addressing:

Q. I confess I may not be as bright. I thought that you had --

THE COURT: Mr. Brennan, if I may on that?

MR. BRENNAN: Yes.

THE COURT: Dr. Botosan, is it not true that you rely upon certain real world documents to reach your conclusions?

THE WITNESS: I do.

THE COURT: Those real world documents included considerations of real world matters, not just your own make-believe world; isn't that correct?

THE WITNESS: That is correct.

THE COURT: All right.

MR. BRENNAN: Thank you, Your Honor.

THE COURT: Mr. Brennan, I do want to instruct you if you go to the 2007 decision, I don't want you to read from it. I just want you to simply state its conclusions.

MR. BRENNAN: Fair enough, Your Honor. Thank you. I'll do that.

The judge is verifying here that he's made the right call, that she did in fact include real-world documents considering real-world matters in her make-believe world, and that's why he lets Novell continue. Here's what she listed in her report [PDF] as documents she relied on:

Look at how many real-world documents there are about the litigation. It's amusing that you see only depositions from SCOfolk, though. She built her but-for world and her events study on people like Maureen O'Gara and Darl McBride, without depositions that presented opposing evidence. There's an exhibit from it but no Chris Stone deposition, for example, to counter the O'Gara one, which Botosan swallows whole without even noticing that O'Gara imagines what she *thought* Stone meant, as opposed to what he said he said and what he said he never said. It's all tipped away from any balance. She didn't consider a single opposing deposition. Not one. All of these depositions happened in the real world, by the way, and none of the Novell ones would have happened at all in her but-for world, yet here they are on her list. I'm aware that SCO chose to drop any questions about the events list, but the report includes it, and the jury got to see it.

And she *still* argues that if Novell had said nothing, all would have been smooth sailing for SCOsource? Based on what? It's *that* assumption that seems to be built on thin air. Plus the assumption that Novell slandered SCO's title, when in reality it was the other way around. How can she claim that, in her but-for world, Novell never did anything wrong and simultaneously figure out damages figures for what Novell should pay SCO in the real world, based on words and actions that no one to date has said were wrongful?

Obviously, the Novell words about owning copyrights led to the litigation, which SCO initiated, and the depositions were one result. So do you see how Novell's position makes sense, that in actuality Botosan's but-for world includes a lot of real-world documents and events that influenced her, but which were highly selective and all favoring SCO?

And by the way, there is something in her events study that I found a bit jarring. There may be an explanation I can't think of or don't know, but look at this, will you? Here are some other events she took note of in her events study, in addition to the August 4 statement about the Red Hat lawsuit I mentioned earlier:

She seems to be mixed up. I don't see Sun at all on the list of events, even though it was the first licensee. So that's not accurate, and if I understand it to be saying exactly what the words say, the part about Microsoft isn't right either. Microsoft *was* the second licensee announced on May 19. Maybe they signed up on the 14th and then it was announced on the 19th? It's garbled info. That's my point.

And not everyone agrees that Amendment 2 backed up SCO's claims. Judge Kimball didn't think so, for example, and neither do I. Neither did this jury in the end, but Botosan says it that way. By the way, I notice she writes it was a paralegal who allegedly found Amendment 2 on June 5, 2003. Darl testified it was his secretary who called him about it, but perhaps the paralegal found it, but his secretary was the one who called and told him about it.

Botosan also includes what SCO actually took in from SCOsource in the real world in 2003:

So, just Microsoft and Sun, I guess, but the dates are weird.

She said she read all the 10Ks and most of the quarterlies, and in fact she lists them definitely in her list of documents considered. Here's SCOsource licensing revenues "in thousands" for the three months ending January 31, 2004 as per SCO's filing with the SEC: $20,000. For three months.

So how in the world does Dr. Botosan come up with such gargantuan but-for figures? We certainly saw nothing like it in real life. We know that only Sun and Microsoft had signed up between January of 2003 and December, 2003. In August, SCO announced end-user SCOsource licenses. Botosan calls them R.T.U. licenses. But between August of 2003 and January of 2004, they got $20,000. That's all, in January of 2004:

Presumably that's Computer Associates, who said they never asked for a license. It was bundled in.

What does all this mean? It says to me that prior to Novell claiming the copyrights on December 22, 2003, nobody bought a SCOsource right-to-use license, even though they were available from August 2003 onward, but after Novell made the announcement, somebody did, albeit reluctantly. That of course is the opposite of what SCO is trying to prove.

Just as Brennan is about to read to Botosan the August 10, 2007 ruling from Judge Kimball, SCO's lawyer, Brent Hatch, interrupts:

MR. HATCH: Before he does that, Your Honor, can I have an ongoing objection to this line of questioning? That way I don't have to interrupt.

THE COURT: I understand and the court will note that you object to this line of questioning.

MR. HATCH: I would also ask for a curative instruction at the end of this as well.

THE COURT: I will do that.

At this point, SCO knows the judge is not going to stop this line of questioning, so this is for the appeal. You have to actually object at the time, or you can't go to the appeals court with your issue, or at least that's the way it's supposed to work.

Again, Botosan says it's irrelevant that the judge ruled that SCO doesn't own the copyrights it was threatening enterprises with, because in her but-for world, that never happened. Judge Stewart doesn't wait for the very end to issue a curative instruction, after Botosan asks a question and gets an answer from Brennan:

Q. (By Mr. Brennan) Focusing on the District Court's decision on August 10th, 2007, just so we're clear you have it in front of you, there was a decision issued that is 102 pages in length, right?

A. It looks like it.

Q. And the conclusion among others of the court was to grant Novell summary judgment. That is a determination that is a matter of law that under the Asset Purchase Agreement, including Amendment Number 1 and Amendment Number 2, Novell did not transfer the UNIX copyrights to SCO, right?

A. Can you repeat that, please.

Q. I would be pleased to, if I can get it right. One of the determinations made by the District Court in its order dated August 10th, 2007 was to grant to Novell judgment as a matter of law that Novell did not under the Asset Purchase Agreement, including Amendment Number 1 and Amendment Number 2, transfer ownership of the UNIX copyrights to Santa Cruz Operation or its successor The SCO Group, right?

A. Can I ask if that was one of the decisions that was overturned?

Q. You certainly may. I will represent to you two things. First of all, that what I have just stated to you is an accurate statement of the court's record. Do you understand that?

A. Okay.

Q. Any reason to question that?

A. I don't think so.

Q. I'll also represent to you that as the court has instructed you, that there was an appeal taken and that the Tenth Circuit Court of Appeal determined that there was a factual issue that would require trial on that point?

A. Okay.

THE COURT: Which is another way of saying, ladies and gentlemen of the jury, that that specific finding -- decision, excuse me, not fining but that decision by the court previously in 2007 was reversed by the Court of Appeals and that is the reason why we're having this trial.

Q. (By Mr. Brennan) Now, understanding that in 2007 the court, the District Court had issued judgment in Novell's favor, would you expect in the real world that in 2007 anyone would buy a license from SCO?

A. That is in fact the entire problem right there. That is the whole --

Q. That is the problem.

A. -- that is the whole basis of the damages analysis. Because Novell did what it did and SCO couldn't convince users that it owned its copyrights, that is why there are damages. That is why there are damages.

Q. If you would listen to my question carefully and I apologize if I'm not phrasing it well. I'll do my best to do better. Would you agree with me that in the real world, that if there are real potential licensees and real potential customers, if they learned that there had been a judgment issued in Novell's favor finding that SCO did not own the UNIX copyrights, that those potential customers or licensees would not have purchased a SCO source license in 2007?

MR. HATCH: Your Honor, just to be clear, I think it is ambiguous. Is he asking about the particular finding here or the fact that it has been reversed and it is of no effect? I mean I don't know. The question seems a little odd to me.

MR. BRENNAN: Well clearly, Your Honor, I'm not. The -- excuse me, the Tenth Circuit decision was not issued until 2009. I'm asking about 2007.

MR. HATCH: But being --

THE COURT: I think that is clear, Mr. Hatch.

This is Ground Zero Awful for SCO, because this is exactly what they never wanted the jury to know about. Perhaps that's why they gave Botosan the instructions they did, in part, to create this but-for world so narrowly. But in SCO's yearning for damages, they included 2007 in Botosan's make-believe world, so they could ask for damages for that year too. As a result, here the jury is finding out that a federal District Court judge looked at the same evidence that they are now looking at, more or less, and decided that even with Amendment 2, the APA didn't give SCO any copyrights. That is the exact question they are being asked to decide.

That's hemlock for SCO to drink, but drink it they had to. And that's why they object and object and want the appeals court now to undo what happened and give them a do over.

Her next answer, after the judge tells her to answer the question sinks SCO's appeal though, I would think, in any fair world:

THE COURT: Ms. Botosan, if you would please answer the question?

THE WITNESS: I can. So again, it is not relevant to the damages analysis in the real world. That -- that is the point. People wouldn't buy SCO source licenses because Novell had slandered the title. Because Novell had said that there weren't copyrights, that the copyrights weren't owned by SCO which was also the case which yielded those decisions which in the real world have been overturned. So but for my damages analysis, again, all of this is irrelevant because Novell would not have slandered the title, there wouldn't have been a court case, there wouldn't have been a question about ownership. The only question that would have existed would have been about whether the copyrights were infringed. And that I will grant exists in the real world and it exists in my but for world. But all of the rest of this can't exist in the world that I'm examining.

Ah. It exists, the question of whether the copyrights were infringed, in both the real world and in her but-for world. And that is precisely the issue in both the IBM and the Red Hat litigations, so they belong in the but-for world. And in the real world, people didn't want a SCOsource license for many reasons, including a desire to wait and see if IBM and Red Hat won, whether any court would rule that SCO's copyrights, if it owned them, were infringed. Yet Botosan calculates the damages as if IBM and Red Hat were not a factor at all, and that without Novell, and Novell alone, SCO could have sold SCOsource licenses in the millions, so Novell, and Novell alone, should pay SCO for any lost license opportunities.

That is the fundamental unfairness of Botosan's but-for world, and Dr. Pisano's for that matter, that they put the entire weight of any loss on just Novell. And that's not accurate in either world, the but-for world and surely not in the real one.

Brennan implies exactly that in this exchange:

Q. So for purposes of your analysis, in the real world the events that would be relevant for a person making a decision as to whether to acquire a SCO source license, whether it be a vendor license or a right to use license, would be events that occurred between 2003 and 2007, right?

A. So again, for my damages analysis those real world events, the ones that you're describing, don't matter. There are real world events that do matter. So, for example, how much sales did SCO actually generate? That is in the real world and that matters. And I deducted that off of my calculation. So there were -- there is information in the real world that matters, but there is also events in the real world that can't matter because they're simply --

Q. Too real?

A. -- completely at odds with the but for world.

Indeed. Completely at odds it is. So he's gotten her to say that her but-for world is completely at odds with reality. Case closed.

Don't interrupt when your enemy is making a mistake is the rule, and so Brennan suggests it's time for a break soon. Meanwhile what has just happened is sinking into the jury's mind, and even Dr. Botosan seems to be aware that this isn't going well:

Q. Okay. All I'm trying to find out from you so that we're clear is that the range of events, real or artificial, real or imagined, are those that occurred between 2003 and 2007, right?

A. I wouldn't agree with that. As I said before, when I -- when I, you know, as I have done my analysis and gotten prepared for my testimony, it is important for me to understand as best that I can what, you know, what has gone on in the case. And so, you know, you can't -- again, you can't sort of pick and choose what you want me to pay attention to and what you don't want me to pay attention to.

MR. BRENNAN: Your Honor, I'm mindful of the clock. Would you like me to go for another five minutes? I'm nearing the end.

Doesn't she sound flustered to you? She does to me. Brennan then asks her if in doing her calculations, she used the Microsoft and Sun license agreements as the template, in that Deutsche Bank did so. She denies that Deutsche Bank use those two as a model in doing their projections, so he asks her if those two agreements were for UnixWare. She says they were, SCOsource vendor licenses for UnixWare. So he asks her if the SCOsource license was to protect you against litigation for infringement of Unix copyrights, as opposed to UnixWare ones. She gets even more flustered and admits she doesn't understand the question, that this isn't her area of expertise, "I just don't understand the question, I'm sorry. You must be outside of my field of expertise because I honestly do not understand the question."

Truly, I believe her. This isn't. But how can you calculate damages without that distinction? After all, in the IBM litigation, SCO after years of discovery didn't list a single UnixWare copyright as infringed or misused, only Unix copyrights. After a SCO objection, Brennan asks one last question before the break:

Q. (By Mr. Brennan) Just so we're clear, because you understand that the subject matter of this litigation is whether Novell transferred ownership of the UnixWare copyrights to SCO, the subject of the SCO source licenses was one where SCO asked Linux users to pay a royalty or a fee to protect them against claims of infringement of the UNIX copyrights, correct?

A. So my understanding is that when -- so that UnixWare included everything up to and including UnixWare. That was my understanding. So UNIX, UnixWare that is all, um, incorporated in that word that we use which is UnixWare because it is all the versions up to and including UnixWare.

MR. BRENNAN: I'm mindful of the time, Your Honor. I'll pause at this moment.

In short, she didn't make any distinction at all in doing her damages calculations. But shouldn't she?

The jury is excused for the break, but the judge brings up the reason he is allowing this line of questioning, and he offers the Novell side another admonition:

THE COURT: Counsel, I do want to again state about the court's reason for allowing the line of questioning of Mr. Brennan. It is true that Dr. Botosan has focused her report entirely in her make-believe world, but I believe that it is the right of the defendant to try to draw the disconnect between her world and the real world. I believe that the defendants have the opportunity not only to challenge the premise of her make-believe world, but to again draw that disconnect. But I do have to caution Mr. Brennan that there is a limit and I do not want any specifics, if you intended to go there, about legal fees to a specific law firm or anything of that sort that is going to be highly prejudicial.

MR. BRENNAN: Thank you, Your Honor, for the admonition. Your Honor, the only thing that I had mentioned of what I intended to do, so that I don't again have any difficulty with the court which would deeply chagrin me, is to point out that on these two license agreements that there was a 20 percent fee that was paid to the firm for those license agreements which directly impacts the purported bottom line which directly impacts the projections. In other words, the cost structure is grossly different than what was represented in the objections.

THE COURT: I understand that is what you're doing, but I think you can do that without specifying a law firm.

MR. BRENNAN: I would be happy to do that, Your Honor.

MR. HATCH: Your Honor, one small matter. I say this with the greatest respect, but I would appreciate it if -- I think that the term that Dr. Botosan has used and Mr. Brennan has been a but for world and not a make-believe world.

THE COURT: All right. You're correct, Mr. Hatch.

MR. HATCH: Thank you.

THE COURT: Mr. Brennan, you should make reference to it as a but for world as will the court.

MR. BRENNAN: Thank you, Your Honor.

THE COURT: All right.

MR. SINGER: Your Honor, may I? I know you have to go but can we, perhaps before the jury comes back, revisit the issue of any reference to attorney's fees? That is no different than any case where an award might have some implications.

THE COURT: Isn't it true, Mr. Singer, that she testified yesterday as to what she presumed the costs of this program would be?

MR. SINGER: That is true.

THE COURT: And that included legal fees. And she based it upon certain assumptions. To the extent Mr. Brennan can establish those assumptions are incorrect, I believe he has the right to do so.

MR. SINGER: But I think that would be the same as telling a jury in a case that a certain percentage of the award is going to have to be used to pay the lawyers because the only relevancy of those agreements would be --

MR. BRENNAN: I don't want to belabor this. They have suggested this is a business with a cost structure. That is what we're talking about.

THE COURT: Okay. I understand your objections, Mr. Singer. It is noted. But the court will allow the questioning. I have just cautioned Mr. Brennan to not be so specific that it becomes prejudicial.

MR. SINGER: Thank you, Your Honor.

I gather Mr. Singer would prefer that the jury not know that his firm benefits financially from SCOsource licenses. Singer tries to spin it that it's no different than a law firm getting a percentage of a winning case, but in reality it is different, because the law firm is to get that too, if SCO were to win in the end, *plus* a percentage of license agreement payments as they happened. And it was ongoing, so in figuring out what SCO could earn from SCOsource, minus what it would cost them to get it, the legal fees are part of what it cost. Should Novell have to pay that too in calculating any damages?

Brennan has done so well with Botosan, after the break he announces he's done with his cross examination. Really, could anyone on planet earth do any better? SCO now tries to rehabilitate her on redirect. Basically, he draws out that the risk factors in the real world were factored in to Deutsche Bank's calculations, so she allegedly didn't need to consider them again. It's really as lame an answer as that. She says even with the risk factors, Deutsche Bank thought the stock would go to $45, which of course it never did. The jury already knows from Brennan's part that this bank was pushing the stock.

She is given a pen by Brent Hatch, and he asks her if, after all the four hours of questioning, she'd like to change any of the figures on the whiteboard. She says no, except the zero damages if SCO didn't own the copyrights. Hatch says he's not sure if the judge will let her, since it's Novell's argument when she wrote that, and the judge immediately says, "No." So there it stands, how much Novell should owe if SCO doesn't own the copyrights, and at least one judge at that point didn't think they did. It just hangs in the air. I would imagine the judge is right, that the jury is wondering by now why they are even there.

Brennan does a brief recross. Or more accurately, he starts to. The judge won't let him do it, though. Hatch had asked Botosan about the earlier court rulings:

Q ... Mr. Brennan talked to you about a lot. I am only going to talk to you about a couple of things. The 2004 court decision that he talked to you about, do you recall what kind of a motion was at issue in that case?

A It was the motion to dismiss.

Q Yes. Do you know what the ultimate result of that was?

A That it was found in favor of SCO.

Q In favor of SCO. Mr. Brennan didn't tell you that, did he?

A I don't recall him mentioning that.

Q This 2007 decision that he talked about, do you recall what kind of a motion that was?

A That was a summary judgment motion.

Q And do you recall what the ultimate outcome of that was after it went to the court of appeals?

A It was overturned.

Q In favor of who?

A In favor of SCO.

That isn't altogether so. The court of appeals didn't overturn everything. SCO still owes the amount that the earlier trial ordered them to pay Novell for the Sun license, as just one example. So I think the judge erred here in not letting Brennan fix that. SCO on the other hand sees it more like this, as expressed in one of the four questions it poses to the appeals court:
4. Did the district court abuse its discretion by (i) changing course from its rulings in the first two weeks of trial, in which it found that such evidence was extremely prejudicial to SCO, and allowing Novell to inform the jury of judicial decisions in Novell's favor that this Court had reversed;
It's certainly true that the judge didn't want that material brought up. And he warned SCO to be careful not to open any door to it. But they did. I would argue that in fact the design of Dr. Botosan's study made it inevitable, and I wonder why Boies Schiller didn't realize it in advance? Maybe they did, but it was too late to get anyone else? They've had the report for a couple of years, though. I'm frankly stumped. I can't see why they let her testify at all.

By pretrial rulings, SCO means things like the motions in limine, like this ruling [PDF], granting SCO's motion [PDF], despite Novell's opposition [PDF], to keep all such information away from the jury. Novell's motion to disqualify Dr. Christine Botosan is on that same page, and even though the judge denied the motion, you'll see everything they thought was wrong with her study.

As for the motion to dismiss, while it's true that the judge denied the first Novell motion to dismiss in 2004 (there was a second try in 2005, also unsuccessful, because the judge felt there was a need for discovery), he did so while also stating that there were substantial doubts that the APA with Amendments 1 & 2 tranfered the copyrights SCO. That is the same as saying that it looked to him that Novell was going to win on the copyrights ownership issue, so Brennan wanted to let the jury know that the public perception was that SCO was going to lose, but it would just take longer to get to the last moment in the litigation. He tried to offer a news article from the time period, but Judge Stewart however doesn't allow it to be presented. Here's the Kimball decision on the motion to dismiss, as text, [PDF also] if you are curious. The Pacer entry will help you to understand why Brennan mentions more than one motion:

Memorandum Decision denying [11-1] motion to remand, granting in part, denying in part [2-1] motion to dismiss: Dft's Motion to Dismiss is denied as to pla's pleading of falsity and granted as to pla's pleading of special damages. Pla is granted 30 days from the date of this order to amend signed by Dale A. Kimball cc:atty (blk)
So, while SCO won part of the motion to dismiss, it was only in part a win, with Novell winning also in part, and SCO lost its motion to remand to state court. That's what Brennan was trying to explain to the jury, that to say that SCO won, with an aspersion that he didn't say that is to simplify what happened to the point it's not accurate.

To tie this package up with a bow, here's what SCO wrote in its appeal brief about this testimony and the decision the judge made to let it happen:

In the second week of trial, however, the court decided to permit Novell to quote from the prior decisions in cross-examining Dr. Christine Botosan, SCO’s damages expert, on the theory that the decisions pertained to the “but for” world of Dr. Botosan’s damages model. (A2549:1494-95.) Novell’s counsel proceeded to read from the district court’s June 2004 and August 2007 decisions, with respect to Novell’s motion to dismiss and motion for summary judgment, respectively. Novell first read from the June 2004 decision, including the language stating that Amendment No. 2 “is not retroactive to the date of the APA” and that “although Amendment Number 2 states that its effective date is the date of the amendment, the language of Amendment Number 2 does not state that a transfer of the copyrights is to occur as of the date of the amendment.” (A2549:1494-95.)

After the district court gave a further instruction in a futile attempt to cure the prejudice to SCO (A2550:1498), Novell continued with its cross-examination of Dr. Botosan and asked further questions about the August 2007 “grant to Novell [of] judgment as a matter of law that Novell did not under the Asset Purchase Agreement, including Amendment Number 1 and Amendment Number 2, transfer ownership of the UNIX copyrights to Santa Cruz Operation or its successor The SCO Group.” (A2553-2555:1511-18; see also A2555-2556:1521-22.) Dr. Botosan explained at length the irrelevance of those decisions to the but-for world on grounds that Novell never sought to contradict. (A2550;A2555.)

SCO had intended to put Chris Stone on the stand after Botosan, but he's bumped over to the following day because it's too late to start that now, SCO feels, and they don't want to interrupt, and so SCO says it will play out some depositions instead. There's no video for the Gasparro or Pettit depositions, so the lawyers play the parts, leading to this bit of humor, beginning with the judge to the jury:
THE COURT: I want you to note that counsel are to be judged by their skills as attorneys and not as witnesses.

MR. JACOBS: Unfortunately.

I think, actually, it's fortunate indeed. In any acting contest, I think Mr. Singer would be victorious. But that's just my assessment.

The three are snips from the depositions of Larry Gasparro (October 7, 2004), Philip Langer (November 5, 2004) and Gregory Pettit (October 7, 2004).

Larry Gasparro deposition:

He tells what he said and showed to customers about the legal basis for SCO's actions as he was trying to sell them SCOsource licenses:

Q Can you just tell me what it is that you explained to those customers with respect to the legal action?

A As I recall, we had identified certain segments within the AT&T source code agreement between AT&T, Novell and SCO. There were excerpts of that contract inserted into the slide presentation and a display of the SGI infraction of the literal copying of the source code into Linux.

Q Do you have an understanding of what the intellectual property license for Linux that's referred to in this document is?

A Yes, I do.

Q Can you tell me what that is?

A Yes. The SCO IP, affectionately called IP license for Linux, was a product that we announced August 5th, 2003 to provide Linux end users with an option at their discretion to cover any issues or resolve -- resolve is the wrong word, but to, in other words, purchase a license to protect themselves against any risk associated with UNIX source code in Linux.

That last is bound to remind the jurors of the question Brennan just asked Botosan about whether it made sense to use UnixWare license agreements with Microsoft and Sun as a basis for calculating damages from alleged copyright violations of UNIX, which is what SCOsource was about, according to this SCO witness. As for SGI, that was one of the more ridiculous stunts SCO pulled, which SGI answered in 2003. SCO threatened SGI, and then suddenly dropped it, and yet Gasparro says their explanations were successful, relying on this.

He is asked, of course, if Novell made it hard to sell SCOsource:

Q And you said that in your mind there was negative feedback because people weren't purchasing licenses. Was the SCO licensing program affected by Novell's claim?

A Dramatically.

Q Was the SCO licensing program also affected by IBM's funding of the Open Source Defense Fund?

A Yes.

So, there's two reasons potential licensees were not so interested in buying, according to SCO's own witness, but Botosan sees only Novell as responsible to pay for lost opportunities. It doesn't compute.

Gasparro testifies that Google, Cisco and Ford all mentioned Novell as a reason they were not interested, so he figures they lost out on $50-$60 million.

Novell asks Gasparro about an email he sent to Darl McBride:

Q And, Mr. Gasparro, you have in front of you what's been marked as Trial Exhibit A-15, --

MR. JACOBS: Your Honor, this has previously been introduced into evidence.

Q -- which is an e-mail from you to Mr. McBride, it appears, dated May 21st, 2003?

A Yes.

Q Do you recognize this e-mail?

A Yes, sir.

Q The first sentence of your e-mail states, after one week of talking to our customers and reading independent articles, we need some immediate position/leverage to generate IP revenue (Q3) from end users?

A Yes, sir.

Q Can you explain to me what suggestion you're making to Mr. McBride?

A I think there were, going back, I believe there were a lot of doubters, it wasn't a very popular position for SCO to maintain, and so the number of approximate naysayers were certainly out there.

Note that this is *before* Novell said anything about copyright ownership. That didn't happen until May 28, five days later. Yet here is SCO's witness in an email to McBride saying that there are a lot of doubters and naysayers out there. How, then, can Dr. Botosan's calculations be correct? Does Novell have to pay for the doubters and naysayers not taking a license, too?

Gasparro heard about the deep divers looking at the code, but he never actually saw their reports. And he personally can't identify any infringing code in Linux. He just sold the licenses.

Phillip Langer:

He was another salesman, originally at Santa Cruz and then he ended up regional director of intellectual property licensing at SCO Group in January of 2004. He reported to Gasparro. He worked on the EV1 deal. He approached a lot more companies, but EV1 is the one deal he worked on that resulted in someone actually taking a license. He too is asked if Novell made it hard to sell SCOsource, and he says it did. But I find his testimony odd, considering that Novell was saying those things in May of 2003 to December of 2003, when he worked still at Santa Cruz, if I've understood his chronology, yet he is testifying about it, using "we":

Q And did the fact that Novell made those public pronouncements questioning SCO's ownership of UNIX's IP negatively impact your ability to sell licenses?

A Yes.

Q Do you know when Novell made this announcement that you talked about with Mr. Samuels?

A Novell first made the announcement, it was last year in 2003, that they were questioning the claims of the UNIX that I think we -- we came out with our Amendment 2. They recanted. Then they came out later, I think it was like August 2003, that kind of time frame, they started leaking that they owned it. Then once the suit was filed, it came to kind of a hold. I mean, we were always -- we started to get a lot more once Novell started that they owned and they can indemnify because they had UNIX rights, were making that public. Then all the licensees -- potential licensees became very interested in, well, if you don't own it, we're not going to buy a license from you, which really, you know, put a hold to selling licenses.

He just told us that he was at Santa Cruz when all this was happening, I thought, so is he giving first-hand testimony here? Was there some deal or arrangement between Santa Cruz, then called Tarantella, and Caldera, now called SCO Group to sue over alleged copyright infringement in Linux? I'm a bit confused about how he can possibly provide this testimony, unless he got his dates wrong, or I did, if it's hearsay only. Yet he talks like he was involved somehow in 2003:
Q Did you have any projections of what revenues you could have obtained were it not for Novell's announcement?

A I don't have any projections on hand. I know we had a pipeline that we're starting to build, and when the Novell issue started to come up, I mean, I thought we were going to be able to do at least -- I mean, a couple million to three million in my territory I was hoping for. But when that type of -- once the questioning of the ownership came out, the pipeline was killed.

But weren't all that projection and Novell's words and actions all finished and done with by December of 2003? And wouldn't that be before he joined SCO Group in January of 2004? The plot thickens. One has to ask how involved Tarantella was, if it was, in this whole attempt to get money from Linux users. I mention this because SCO is complaining in its appeal that the jury didn't properly give weight to SCO witnesses. But if the jurors noticed this date problem, they certainly had a reason to discount at least this testimony. Or to be more exact, I do. If he wasn't there, he wasn't there. And if he was selling or involved in planning the selling while still at Tarantella, I'd certainly like to know more about how that came to be.

He does testify that Regal Entertainment specifically mentioned the cloud over the copyrights as a reason not to go forward on a large deal, a deal he says that was for between $300,000-$350,000. He says there were others, the names no longer remaining in his memory. Like Gasparro, Langer says he has no knowledge of any infringing code in Linux. When customers asked for more details, he asked Gasparro, but he never got anything. When customers asked SCO to do a line by line comparison, they were told SCO wouldn't do that.

Deposition of Gregory Pettit:

Yet a third salesman takes the stand, via the deposition being play acted by the attorneys. Pettit was at the time regional director, intellectual property licensing at SCO. He also says that Novell interfered with sales. He mentions Raytheon. SCO showed them malloc code. Sigh. Raytheon may have been too polite to tell them the real reason they were not interested. He assumes it was Novell. But does SCO have any legal right to sue anyone over malloc? Take a look at the reaction when SCO tried to make that claim in 2003. And here's Bruce Perens Might this not be what Raytheon meant when it told him there were questions in their mind about copyright ownership?

Q What was Raytheon's response to your presentation?

A Basically it was thank you for the information and as a result of sensitizing them to a potential problem, they were going to just go off and investigate and understand how they were using Linux in-house.

That isn't Novell's doing, taking the words as meaning what they say. But there were others. He did a proposal for Merrill Lynch, but they specifically mentioned Novell as a reason for "postponing any action". Which isn't exactly a lost sale either, if you think it through, just a postponement until the courts could adjudicate who actually owned the copyrights. It's only a lost sale if you know SCO will lose in the end.

He is shown a letter from Sylvia Khatcherian at Morgan Stanley, asking for more details. SCO never followed up with any. How is that Novell's fault, pray tell?

On cross, Pettit admits that they didn't follow up with Raytheon. That's incredible. They'd rather sue Novell? What about the other companies?

Q You spoke here of them trying to pull together some materials to present to Raytheon. Then you said they put things on hold and they never finished putting together the presentation. I guess we established that they never finished the material for Raytheon. Do you know if they made any similar presentation for other companies?

A Oh, okay. In that context, no.

Q I'm sorry. You don't know or they didn't do it?

A They didn't. Well, actually, I can't speak definitively. I can speak to my customer community.

Q You don't think they did?

A My customer community, no.

And with that, they recess for the day, but not without one final instruction from the judge to the jury:
THE COURT: We'll go ahead and recess for the afternoon.

Ladies and gentlemen of the jury, I do have to specifically stress one thing. During Dr. Botosan's first testimony today you heard reference to the fact that she got on the Internet and Googled and used other means whereby she found out about this case. That is something that has been covered by this Court in instructing you what not to do. As I've told you several times, you are not to be doing any research on your own, you are not supposed to be discussing this case or doing anything on your own that will give you any information. You make your decision in this case only on what you hear in this courtroom by way of testimony, the law you will be given by the Court at the end of the case. I would again remind you that you should avoid any reading of about this case or listening to anything or watching anything on television or anything else pertaining to this matter nor should you be discussing the case with anyone.

If ever there was a day at this trial that might make a juror wish he could hop on the Internet and get some clarity, this would be the day. What in the world must they have been thinking? Until later in the trial, they don't really know where to put anything, I'm guessing. I suspect the judge was aware they might be puzzled, and that's exactly why he reminds them not to go on the Internet and do any independent searching. You don't want a mistrial after a day like this. Happily, the jury was obedient.

After the jury leaves, the lawyers go into what is on the schedule for the following day, Chris Stone for sure, followed by Maureen O'Gara, then John Maciaszek, Andrew Nagle and Ryan Tibbitts. That's just what is projected by SCO. In reality, it turned out to be less. Brennan says they'll call their first witness after that, and Novell's first witness will be their damages expert rebuttal witness, Terry Musika. I'm looking forward to that. He's the one Botosan said loved to quote Dion Cornett.

And with that, we finally arrive at the end of this long day of testimony.


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