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1995 SCO, HP, Novell press release: SCO bought the UnixWare business
Saturday, November 13 2010 @ 12:17 AM EST

I found something that is one more piece of evidence that what SCO bought from Novell was the UnixWare business -- not UNIX, not the copyrights, not everything lock, stock and barrel, as SCO unsuccessfully argued in the recent SCO v. Novell trial. I'm pretty sure that it's the press release Novell's MOFO attorney Michael A. Jacobs showed to Alok Mohan, mentioned in this article about day 4 of the trial:
Then Jacobs hands him another press release about working with HP and Novell to create "a high volume UNIX OS with advanced network and enterprise services".
We didn't have that exhibit before on Groklaw that I know of, so I am putting it here now for historians, for the completeness of our records on the trial.

It's a 1995 joint press release by HP, Santa Cruz and Novell dated September 20, 1995, one day after the APA was signed by Santa Cruz and Novell. That makes it Santa Cruz telling the world *at the time* what it thought it had purchased, and what it says it bought is ... the UnixWare business. At the trial, Alok Mohan, a SCO witness, was asked if the press release accurately reflected the deal, and he said yes. What could he say? He's quoted in the release. He was then Santa Cruz's President and CEO.

That confirms to me the correctness of Judge Ted Stewart's ruling. SCO is appealing that ruling, asking the appeals court for another trial as alternative relief, but I can't imagine how they can in light of this evidence and Mohan's confirmation of its accuracy.

Here's the interchange between Mohan and Jacobs, from the transcript:

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

A Uh-huh.

Q Do you see that?

A Yes.

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

A Uh-huh.

Q -- on page one --

A Uh-huh.

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

A Yes, I see it.

Q Is that consistent with your memory of the transaction?

A Yeah.

Isn't that clear? What else can Mohan say? SCO was a public company. He can't say he was just kidding in the press release, after all. There are laws about public companies.

The press release was announcing the 64-bit UNIX on Intel project the three companies decided to work together on, and notice that it says that what Novell sold to SCO was the UnixWare business:

SCO has purchased the UnixWare business from Novell and will consolidate its SCO OpenServer system and Novell's UnixWare into a merged high-volume Intel-based UNIX operating system that provides interfaces in common with HP-UX.
So, that's what SCO said it bought one day after it bought it, the UnixWare business. It's evidence, essentially contemporaneous, that totally confirms and supports Novell's argument, that the purpose was to merge UnixWare and SCO's OpenServer and make it work with NetWare, and that's why SCO wanted to purchase the UnixWare business, to work on this merged product. For this project, that's all it needed.

SCO argued at trial that the parties had released a joint press release about the APA on September 20, 1995, but here's what Judge Stewart wrote in his ruling:

54. SCO also points to the parties' course of performance to support its argument that it was the intent of the parties to transfer ownership of the copyrights.

55. SCO points to a "joint" press release issued after the transaction. That press release announced an "agreement for SCO to purchase the UNIX business from Novell." The press release goes on to state that "SCO will acquire Novell's UnixWare business and UNIX intellectual property." While SCO described this as a "joint" press release, there is no indication that it was joined in by Novell and appears to be issued solely by SCO.

Further, the press release supports Novell's argument that SCO only acquired the UnixWare business, as opposed to the UNIX business. Finally, though the press release mentions "UNIX intellectual property," it does not specifically mention copyrights and could just as logically refer to other UNIX-related assets which did transfer under the APA.

That last is referring to the trademarks that did transfer and some copyrights on manuals. The SCO press release referenced by the judge is not this new one I found, by the way. It's Exhibit 8 in this collection [PDF]. The new find confirms what Stewart figured out even from SCO's exhibit.

This September 20, 1995 press release clearly matches what Novell successfully argued at trial was the purpose of the APA, to build on to the code to create a merged product.

SCO argued that Amendment 2 fixed a "mistake" in the APA later, but no one I know has ever believed that fantastical legal theory, that all the lawyers went rogue and nobody noticed. Do you see anything in this press release that would indicate that? Me either. What I *do* see is that Alok Mohan is quoted in this press release, matching his confirmation of its accuracy by his testimony at trial.

By the way, Novell did issue a press release about the sale, but it's dated December 6, 1995, and it also says what Novell sold was the UnixWare business, right there in the headline:

Novell Completes Sale of UnixWare Business to The Santa Cruz Operation

OREM, Utah -- December 6, 1995 -- Novell, Inc. today completed the sale of its UnixWare business to The Santa Cruz Operation, Inc. (SCO), finalizing an agreement first announced in September, 1995. Under the agreement, Novell receives approximately 6.1 million shares of SCO common stock, resulting in an ownership position of approximately 17 percent of the outstanding SCO capital stock. The agreement also calls for Novell to receive a revenue stream from SCO based on revenue performance of the purchased UnixWare business. This revenue stream is not to exceed $84 million net present value, and will end by the year 2002.

In addition, Novell will continue to receive revenue from existing licenses for older versions of UNIX System V source code. Also, Novell will receive royalties from SCO's licensing of its NetWare networking software, including NetWare Directory Services (NDS), for use in UnixWare based operating system products.

The transaction positions SCO to consolidate the UNIX System on the Intel platform. SCO plans to merge the SCO OpenServer Release 5 and SCO UnixWare product lines to create a standard high-volume UNIX operating system that contains integrated NetWare networking software. SCO has announced that the merged product will begin shipping in 1997. SCO has also announced that it will ship the next release of UnixWare in the first quarter 1996, and that this UnixWare product will include NetWare networking software to help customers integrate UNIX Systems with Novell networks.

Did you notice that this one release confirms the following?
  • That what SCO got was the UnixWare business;
  • That what Novell retained was the revenue for SYSV licenses, money it already had but would continue to get;
  • That the purpose of the transaction was what Novell said, to create a merged product, OpenServer and UnixWare with NetWare, a product that then would benefit both SCO and Novell.
  • That Novell was not restricted to revenue from binary licenses as SCO tried to claim. ("In addition, Novell will continue to receive revenue from existing licenses for older versions of UNIX System V source code.")
Here's another press release quoting Robert Frankenberg dated September 21, 1995, in which he comments on the APA and on this 3-company project:
Robert J. Frankenberg, Novell, Inc. chairman and CEO today announced five strategic initiatives intended to deliver on Novell's vision of pervasive computing by enabling the Smart Global Network. The initiatives encapsulate Novell's business focus for achieving its mission of a billion networked connections by the year 2000.

First, Frankenberg described how NetWare will be the foundation for building the Smart Global Network. NetWare will be extended to meet the emerging needs of electronic commerce, workgroup computing and business-to-business communication. Novell will strengthen its networking client support of all popular desktops -- Windows, Windows 95, Windows NT, Macintosh, OS/2, Unix -- and extend the NetWare environment to support all popular application servers including Windows NT, SCO Open Server, UnixWare, HP/UX and OS/2. Frankenberg said, "For the first time customers will have a single environment that integrates the heterogeneous computing platforms in use today." The NetWare operating system will also be enhanced to include memory protection, clustering, and distributed object management. ...

Frankenberg also commented on the September 20th partnership announcement between Novell, Hewlett-Packard and Santa Cruz Operation. This partnership will consolidate, over time, HP-UX, UnixWare, and OpenServer into a single UNIX platform. As part of this agreement, NetWare services including NetWare Directory Service will become an integral part of this UNIX platform. Novell and HP also agreed work together to integrate NetWare services with Distributed Computing Environment (DCE).

So that was the goal, exactly what Novell said it was, and you can see what Novell at the time thought the benefit of the moves would be. Here's another press release about Novell opening up APIs in its Net2000 developer support program, "specifically designed to support a consistent set of interfaces across heterogeneous client platforms including Windows 3.1, Windows 95, Windows NT, OS/2, Macintosh, HP-UX and SCO-Unix. Server platform support will include NetWare, UnixWare™, HP-UX, SCO-Unix and Windows NT Server." Here's one more Novell press release, this one from 1996, showing the kind of business Novell hoped to get from the work SCO would be doing.

Here is the press release about the three companies, then, for the history books, the exhibit shown to Mohan in his deposition and played at the SCO v. Novell trial:

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

HP, Novell and SCO To Deliver High-Volume
UNIX OS With Advanced Network And Enterprise Services
Base Created for Next-Generation Business-Critical Computing

NEW YORK, New York --September 20, 1995 -- Hewlett-Packard Company, Novell, Inc., and The Santa Cruz Operation, Inc. (SCO) today announced business relationships designed to deliver a high-volume UNIXTM operating system with NetWare and UNIX enterprise services. The three companies will work together -- each focusing on its core strengths -- to release a series of merged UNIX products that will provide customers with a clear, evolutionary path to 64-bit networked computing on the HP/Intel architecture. As a result, customers will be able to take advantage of a high-volume UNIX operating system that runs on standard hardware platforms and integrates their current desktop, workgroup, and enterprise networked environments -- protecting their investments while ensuring access to new technologies.

HP, Novell and SCO recognize that the next wave of computing will require the integrated capabilities of a robust enterprise operating system and rich network services, available through high-volume channels. These new relationships will accomplish the following:

  • Novell will provide its market-leading NetWare services that are essential for integrating high-end enterprise environments with workgroups and PCS;

  • SCO has purchased the UnixWare business from Novell and will consolidate its SCO OpenServer system and Novell's UnixWare into a merged high-volume Intel-based UNIX operating system that provides interfaces in common with HP-UX. SCO will leverage its proven ability to bring high-volume UNIX to market;

  • Novell will work with HP to produce a high-performance implementation of its NetWare Directory Services (NDS) and File/Print Services for HP-UX, and integrate NDS with DCE; and

  • HP will lead and drive the 64-bit UNIX operating system for the HP/Intel architecture, resulting in the combination of the 64-bit HP-UX and SCO Intel-based operating systems.
"NetWare, UnixWare and SCO OpenServer are all robust offerings on high-volume Intel-based platforms," said David L. House, senior vice president of Intel's Enterprise Server Group. "The combination of these capabilities, along with HP's expertise in the 64-bit arena, should be a welcome solution for UNIX ISVs and users."

As a result of these relationships, customers will gain the following benefits:

  • Better access to corporate data -- from the integration of NetWare services and UNIX;

  • Wider choice of applications and development tools -- from existing HP-UX, SCO OpenServer and UnixWare solutions; and

  • Faster development of new applications -- from the common interfaces that enable developers to provide new functionalities faster.
"By combining HP's and Novell's respective strengths in enterprise and networked computing and SCO's proven volume distribution channel for its UNIX operating system, we will continue to deliver effective commonality in UNIX," said Willem P. Roelandts, HP senior vice president and general manager, Computer Systems Organization. "By forging these relationships, we are providing a common environment that meets customer requirements for a networked computing architecture spanning the virtual data center from desktop to enterprise business-critical servers."

"Working with HP and SCO to focus on our respective strengths and consolidate our overlapping efforts creates unparalleled new opportunities for our customers and partners. By standardizing on Novell's networking services, our customers benefit from having a greater level of consistency on their networks, reducing their cost of ownership and simplifying their ability to deploy cost-effective application servers. Our partners benefit from a new level of consistency, allowing them to focus on providing value-added capabilities never considered before. HP will take the lead in UNIX technology; Novell will take the leadership role in network services; and SCO will lead in creating technology required for volume channels. We expect this relationship to result in an unprecedented selection of network services, applications, development tools, and channel support on the Intel-based UNIX platform," said Bob Frankenberg, Novell chairman and CEO.

Alok Mohan, SCO president and CEO said, "UNIX is the leading business-critical operating system server for large and small businesses today, and this relationship provides SCO OpenServer and UnixWare customers with a reliable and innovative platform for future growth. HP's technology leadership will ensure the continued success of UNIX. Organizations can integrate their network services and enterprise systems while protecting their substantial investments in hardware and application development."

According to Richard French, Oracle's vice president, Intel UNIX Products Division, "This relationship will create a standard, high-volume UNIX platform for business-critical computing that is very attractive to Oracle and should be to all application developers. Oracle, and other software vendors, will be able to deliver products to customers faster, reduce costly porting and tuning efforts, while spending more time optimizing software functionality and adding specific added value for customers. Additionally, this relationship will reinforce the recently announced initiative by all UNIX suppliers for a 64-bit UNIX."

Hewlett Packard Company is a leading global manufacturer of computing, communications and measurement products and services recognized for excellence in quality and support. Hewlett-Packard has 99,900 employees and had revenue of $25 billion in its 1994 fiscal year.


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