SCO Grp v. Novell Inc

Filing 852

Proposed Findings of Fact by Novell, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Brennan, Sterling)

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SCO Grp v. Novell Inc Doc. 852 Att. 2 EXHIBIT 2 :' I 1 rN THE UNITED STATES DISTRICT COURT 2 3 4 FOR THE DISTRICT OF UTAH/ CENTRAL DIVIS]ON THE SCO GROUP/ J tr corporation, INC., a Delaware 6 1 B Defendant, VS. Pl-aintif f and CounterclaimCase No. 2:04-CY-739 dak Delaware 9 NOVELL, 1U corporation, INC./ a 11 T2 Defendant and CounterclaimPl-aintif f . 13 74 EOPY A. KIMBALL 15 76 BEFORE THE HONORABLE DALE I1 1B DATE: APRIL 29, 2008 REPORTERIS TRANSCT]PT OF PROCEEDTNGS 19 20 2L TRIAL TRANSCRIPT 22 23 24 25 Reporter: REBECCA JANKE, CSR, RMR KELLY BROWN H]CKEN/ CSR/RMR 1 1 APPEARANCES FOR NOVELL: MORR]SON 2 3 4 q & FOERSTER LLP ESQ. BY: MICHAEL A. JACOBS, EIRC M. ACKER, ESQ. 6 1 B DAVID E. MELAUGH, ESQ. 3625 I{ARKET STREET sAN FRANCISCO, CALIFORNTA 94105 9 1_0 11 I2 13 L4 FOR SCO: BOIES, SCHILLER & FLEXNER LLP BY: STUART EDWARD H. SINGER/ J. ESQ. NORMAND, ESQ. 15 T6 L'7 1B ,JASON CYRULNIK, ESQ. 401 EAST LAS OLAS BLVD, SUITE 1200 FORT LAUDERDALE, FLORIDA 33301 I9 20 2T HATCH, JAMES & DODGE, P.C. BY: 10 BRENT O. HATCH, ESQ. SUITE 400 VüEST BROADWAY, 22 23 24 25 SALT LAKE CITY, UTAH 84101 1 2 3 4 5 6 1 B Thesecondpointl'dl-iketoturntorwhich'if and we turn to sl-ide Ig in the binder of materials hopefully werII put it on the screen momentarily here. And it is a follow-up of a statement Mr. Jacobs made here today, where he said. the focus of scosource is svRX. And that's really similar t.o a statement which was f iled in Novel-l's memorandum in support of its motion for Summary judgment on its fourth claim, which is, from start to finish, Novell said, sco never claimed scosource had anything to do with sco's UNIX derivative rights and any attempt by SCo to recast scosource now should fail. SotheyarefeelingtheCourtinitspapersand now in open court, that scosource had nothing to do with unixware. That is símply not so. If one turns to what the documents the court will see during this week of it's the trial will- show, and the very next slide December 2oo2 press rel-ease. sco's shared libraries -and it talks about unixware and openserver licensing agreements did not allow those UNIX libraries to be separated from the operating systems. The January 2003 announcement, which talks about SCO's UnixWare and OpenServer l-icense aqreements, the February 2OO3 sales guide, which says precisely that 9 10 11 t2 13 I4 15 T6 I1 _LO L9 20 2I 22 23 24 LJ with respect to the shared library, the document repeatedly refers to sco's concern that unixvÍare and 31 1 2 3 4 5 6 1 B in Linux. In the July 2003 press release, where it says the company also announced it wil-l offer UnixWare licenses to support one-tíme binary use of Linux for al-l- commercial users of Linux based upon certain terms. So the evidence wil-I show that in fact SCOsource, at its inception and throughout remained concerned with technology that was in UnixWare and OpenServer technology have been improperly used OpenServer. 9 10 11 And the third point Ird l-ike to observe comes off of a chart which Mr. Jacobs used which tries to draw 1,2 this distinction. It's the chart that was the timeline 13 where on the left-hand side you had SVRX and, on the I4 right-hand side, you had SCO UnixWare. And ít suqgrests l_5 that these are two different universes, that SVRX and SCO 16 UnixWare are somehow distinct and, if you're referring to 1'1 II SVRX¡ you're not incl-uding UnixWare, and vice-versa. 18 The reality is, is that there is not a 19 dichotomy in terms of the technology between UnixWare and ZU System V. UnixWare is System V technology. It is the 21 latest evol-ution of that. It is UnixVüare -- UNIX System 22 V, 4.2 MP. And this dichotomy that Novell- seeks to draw 23 between UnixWare and System V, with respect to the z4 technology, is simply not the case. And that's shown, for example, by documents such as Novel-l I s own sales JL -a 1 2 3 4 5 6 1 B binders for UnixWare, which says that this is the latest implementation of UNIX System V, Release 4.2 MP technology and repeats that many times as being the l-atest generation of that use, that this is powerful, scaIable, reliable UNIX System V, Rel-ease 5. Thus, when we talk about our UnixWare rights, when we talk about the System V license in the context of SCOsource, that doesnrt mean something other than 9 UnixWare, that includes UnixWare. And that will be 10 important as we look at the fact that UnixWare has within 11 it the critical- System V technology, and SCO obtained the right to license that technol-ogy and do other things with 12 13 that technology with third parties through the Sun I4 agreement, the Microsoft agreement and the SCOsource 15 L6 agreement. for the I1 purposes of the APA, what is the value on the SVRX 1B rightsr âs defined in the APA, for that portion on which 19 that has to f low through to Novel-l-. 20 Now, if f can put that and let me, before 2I leaving that issue, refer to a couple of the documents aa LL that Mr. Jacobs referred to. He refers to a letter that 23 was sent out to a lot of people with respect to SCOsource .A ¿¿) lj-censing and it talked about are UNIX System V, but that 25 does not exclude UnixWare, which is part of System V 33 The question is valuation of 1 L a 3 4 5 6 1 B for those products, therefore Noveff is entitled only to a de minimus royalty with respect to its residual rights. THE COURT: Thank you, Mr. Singer. You may call- your first witness. MR. JACOBS: We do, Your Honor. We call Mr. Joe LaSala. THE COURT: Come forward and be sworn, please right up here in front of the cl-erk of the Court. JOSEPH 9 LA SALA, the witness hereinbefore named, being first 11 duty cautioned and sworn or affirmed to teII the truth, I2 the whole truth, and nothing but the truth, was examined 13 and testified as follows: t4 THB CLERK: Please state your name and spell it 15 for the record. L6 THE WITNESS: My name is Joseph A. LaSaIa, Jr. I1 My last name is spelled L-a, capital S-a-l--a. 10 18 THE CLERK: Thank you. ahead, Mr. Jacobs. D]RECT EXAMTNATION 79 20 2L 22 23 24 25 THB COURT: Go BY MR. JACOBS: O. Good morning, Mr. LaSal-a. Coul-d you briefly introduce yourself and your background to the Court. A. Yes. Good morninq. My name is Joe LaSal-a. I was the general counsel- at Novel-l- from July of 2001 45 1 through mid-January, 2008. Today I am, and since that 2 3 4 time, I have been the Communications. qenera I counsel of Discovery 5 6 1 B O. Were you involved in the dispute and the rel-ationship between SCO and Novell as the SCOsource campaÍgn unfolded? A. O. A. Yes, f was. Can you characterize the level of your 9 involvement, please? WeIl¡ âs qeneral counsel of the company, I was 11 made aware of virtually all of the important activities j-n connection with the litigation and in connection with T2 13 SCOrs launch of the SCOsource campaiqn, our company's T4 reaction to that, the various public and private 15 communications that occurred between the companies at the 16 time and the enqagement of counsel and overall the 1,1 strategy with respect to our company's response to those 1B activities. 1_9 O. Could you look at the first exhibit in your 20 binder, please, NovelI ExhibÍt 2I5? 2t A. Yes. 22 O. What is that? 23 A. This is a June 24, 2003 Ietter from me to .A z1] Mr. McBride, and I thlnk it. constitutes one of the first 25 letters that NoveIl sent to SCO, and the principal 10 46 1 purpose of this l-etter was to request that SCO provide us 2 3 4 q with copies of two SCOsource licenses that it had recently announced that it had entered into; one with Microsoft and one with an unnamed party. MR. JACOBS: Your Honor, offer Exhibit 275 into evidence THE COURT: 6 7 I thought h/e were going to put all SCO has these in by stipulation. 9 MR. JACOBS: This one, I believe 10 11 objected to, Your Honor. MR. SINGER: We have no objection, Honor. THE COURT Your I2 13 = 2I5 is received. (NovelI Exhibit 2I5 received in evidence. t4 15 O. Mr. LaSala, could you explain to the Court, 16 please, what led up to the sending of or to the 1,1 transmittal of this letter? 1B A. WelI, the precipitating event was a securities I9 fiting SCO had recently made just prior to this letter 20 being sent, parts of which are quoted in this letter, 2t where it became apparent to us that SCO had entered into ) 22 23 z4 25 these two SCOsource l-icenses. But, really, the let"ter was a combination of events of the past or previous six months or sor where we had come to a -- we had concerns that what SCO was doing 41 1 r^/ith its SCOsource campaign may implicate rights that 2 3 4 5 Novell had under the Asset Purchase Agreement, and through their public statements, their press releases, their securities filings, some private communication, May L2 a letter that they had sent to, I think, the Fortune 6 1000 companies in the United States, all of those things 1 Ied us to believe that things that SCO was doing with the SCOsource campaign may implicate certain rights that 9 Novel-l- had under the Asset Purchase Agreement. 10 O. Could you look at the bottom of page 2 of the 1-1 leLter, the second half of page 2, please? T2 A. Yes. 13 O. And what, exactly, was NovelJ asking SCO to do? L4 A. Well, here Novell was specifically asking SCO 15 to provide it with copies of the two agreements in I6 question and any other agreements that SCO may have 1,1 entered into which purported to amend any SVRX B 1B licenses. I9 20 2L 22 ¿J O. And in paragraph B? A. In paragraph B, we were asking SCO that they not enter into any further agreements in which SCO purports to amend these l-icenses or to enter into any new SVRX l-icenses. O. 24 25 And in paragraph C? SCO A. In paragraph C, we were requesting that 4B I comply with its obligations under amendment number 2 to 2 the Asset Purchase Agreement with respect to the 3 manaqement of potential buyouts of a lícensee's royalty 4 q obligatíon. O. à Could you please turn to Novelt Exhibit 220, 6 1 B the second tab in your binder? Vaq Exhibit 220 is a letter dated JuIy II, 2003, from Mr. Mike Brady, who is an employee at 10 NovelI who, at the time, ran the contract management 11 group, to the CFO of SCO, Mr. Robert Bench, advising L2 13 Mr. Bench of two things. First, that it had been more any I4 than six months since Novell had received its royalty reports or royalty payments from sco and that we 15 L6 were demanding that we receive those payments and reports I7 in a manner consistent with the Asset Purchase Aqreement which, T think, required that they be provided quarterly. 1B And the second thing that t.he letter does is it 1,9 20 notifies SCO that Novell intended to conduct an audit of 21 SCO concerning the royalties and other payments due under aa the SVRX licenses and the Asset Purchase Aqreement. So the letters served those two purposes. 23 24 O. Did you work with with Mr. Brady on the transmittal of this Ietter? 9 O. A. What is Novell Bxhibit. 220? Wel-l-, Novell L' /1 A 1 ? 3 4 A. I don't recall specifically, but I'm quite sure that I did. MR. JACOBS: Your Honorr w offer Novell Exhibit 220 in evidence. MR. SINGER: No objection. THE COURT: 5 6 7 B 220 is received. ) (NoveIl- Exhibit 220 received in evidence. 9 O. A. O. Now 220, Mr. LaSaIa, is dated July II, 2003. Yes. 10 11 And 215 is dated June 24, 2003. Between the June 24 letter and the JuIy 11 letter, had you received a I2 1-3 response to 2I5, your l-etter to Darl McBride? A. O. No. L4 15 L6 T1 1B L9 20 21 22 23 24 25 did NoveII decide to audit SCO's compliance with the the Asset Purchase Aqreement? A. Vüell, aqain, Novell had concerns that SCO's activity with respect to its SCOsource campaign may be resulting in monies being paid to SCO that rightfully belonged to Novel-I. So the right to audit is very clear in the Asset Purchase Aqreement, and we thought, given this body of evidence that had been accumulating over the previous six months or sor we thought the wise course of action would be to notify SCO of our intention to conduct an audit. O. Would you turn to the next tab, pJ-ease, Novell And why 50 1 2 J Exhibit A. a. 222? Yes. ) 4 5 is a letter dated July IJ, from Mr. Bench at SCO to Mr. Bready at Novell? A. Yes, Ít is . O. And what did you understand Mr. Bench to be 222 1 B responding to? A. Wel-I, Mr. Bench, in his letter, notes that he's 9 responding to Mr. Bready's July 11 l-etter, where we made the request the demand for an audit, and in this Ietter, he notifies NoveII that paSrment, current payment 11 L2 due to Novell, has been or is being made. He references or excuse 13 that Novell was withholding its payments to SCO was withholding payments to Novell based upon L4 me 15 review that SCO was conductinq on NovelI's activities I6 with respect to our Lj-nux announcements and that they T1 were evaluating the scope of Novel-l's Linux-related ,Lõ activities for compliance. And they also notified -- the l-etter also L9 ZV notifies Mr. Bready that SCO reserves the right to 2I further withhold royalty payments owed to NovelI in íts 22 discretion if it believes that Novell is violating its 23 obtigations under the Asset Purchase Agreement. .A LN O. What was your reaction when you read this 10 25 letter? 51 1 2 3 4 A. WelI, somewhere between furious and bemused guess I would say it that way. O. why? A. Vüell, furious because, in our víew, SCO was a fiduciary to Novell and had a duty and an obligation to collect those royalty payments and to pass them through to Novel-I. Plain and simple. It didn't have any right in the an Asset Purchase Agreement or anywhere eJ-se, under any rule or l-aw that Irm familiar with, to offset or withhold payments due to Novell, for any reason/ and so the assertion that SCO was withholding payments, pending its review of Novel-I's Linux-related activities was absurd on íts facer âs far as we were concerned. And it was somewhat frustrating butr âs I say somewhat amusing as well- because we thought it was totally without foundation. O. Could you turn to the next exhibit, 234? A. Yes. O. What is Novell Exhibit 234? A. This is a letter from me to Mr. McBride dated August J | 2003, where I essentialJ-y conveyed to Mr. McBride, Novellts position with regard to Mr. Bench's assertion in the previous l-etter, those that I just outl-ined for voü¡ and pointed out to Mr. McBride that, you know, SCO was without any right or foundation to 52 5 6 7 B 9 l_0 11 L2 13 I4 15 L6 I1 1B I9 20 2I 22 23 24 25 1 withhold NoveII. any royalty obligations that 'JACOBS: We of fer 234 \^/ere owed to 2 3 4 MR. into evidence, Your Honor Your Honor 5 6 1 MR. SINGER: No objection, THE COURT: 234 is received. ) (Novell Exhibit 234 received in evidence. B O. Now, this letter is dated August J, 2003, this 9 being 234. And your initial letter to SCO about the 10 Microsoft and unnamed third-party license, the other 11 Iicense, is dated June 24. By this time have you 1,2 receíved a response to your June 24 letter? 13 A. No. No, we have not. I4 Could you turn, please, to Novell Exhibit 261? O. 15 A. Yes. t6 I1 , 267 is a November 21, 2003 letter f rom 1B Mr. Bready to Mr. Bench, again, and pretty much most of L9 the fall has passed by this time. And, in this letter, 20 Mr. Bready points out to Mr. Bench that there are certain 2I requests that Novell has made with respect to the audit 22 that have not been fulfilled, and he lays out in some 23 detail the basis of those requests and asks, again, 24 specifically for copies of the two agreements in Vüel-l O. A. What is 261? question. 53 1 WelI, f'm really not clear the audit 3 had not been conducted and completed. Whether 4 had commenced, I think it had, and Mr. Bready references in his letter thatr you know, the purpose of 6 the letter is to request further information and 1 information that had prevj-ously been requested to assist NoveII with the conduct of the audit. 9 O. If you look at paraqraph 7.4 or 1.5 of this 10 letter, what, exactly, are -- was Novell requesting of 11 SCO in this letter? T2 A. Well, again, quite specifically, Novell was 13 requesting that SCO provide Novell- with copies of the !4 Sun -- by this time we knew that this second agreement 15 was the Sun agreement copies of the Sun and Mj-crosoft 1,6 aqreements to verify SCO's compliance with 4.168 of the 1'1 !t Asset Purchase Agreement. In addition, Novell was 1B requesting copies of any similar aqreements that SCO may 79 have entered into. Of courser wê had not known whether 20 they had or not. 2L And, finally, Novell was requesting that SCO 22 ldentify any potential buyout transactions that it might 23 be aware of, so that Novel-l could be properly put on t4 notj-ce if any such types of transactions existed. 25 O. If you Ìook at paragraph 2.2 and 2.3? 2 J O. A. certainl-y or not it So, had the audit been conducted by this time? tr B 54 1 A. O. A. cal-led Yes. 2 3 4 What was Novel-l asking for there? In 2.2 and 2.3, NoveÌI references a new license Intel-l-ectual- Property License for Linux and SCO may new SCO 5 6 1 B requested copies of any licenses for Linux that have entered into under that had established. license reqime that it MR. JACOBS: Your Honor , offer 261 into evidence. MR. SINGER: No ob¡ection. THE COURT: 9 10 11 L2 261 is received. (Novell Exhibit received 267 in evidence.) 13 I4 15 I6 I1 1B I9 20 21, 22 LJ O. Let's turn to the next tab, Mr. LaSala, of Exhibit 280, Novel-l Exhibit 280 . What is 280? A. 280 is a December 29, 2003 letter from Mr. Bready to Mr. Bench, essentially reminding Mr. Bench of Novel-l- I s repeated requests for the information that Novell needed to conduct its audit and expressing a view that it would like to have a response no later than January 12, 2004. MR. JACOBS: Your Honor, offer Novell Exhibit 280 into evidence, Your Honor. MR. SINGER: No objection. LA aA 25 is received. (NovelI Exhibit 280 received in evidence.) THE COURT: 2BO 55 Let's turn to the next tab, 293. What is 293? 2 293 is yet another letter from Mr. Bready to 3 Mr. Bench which rei-terates or references the November 2I 4 Ietter for information that Novell thought it needed to 5 conduct its audit and reiterates the request for the 6 information contained in that November 27 letter. And 1 again, it and in the second paragraph of that letter, it makes note that, you know, Novell had sent you the 9 November 2I letter and sent you a second l-etter on 10 December 29 asking that you comply with the request. LI Letrs turn to 294. u. 1 O. A. Õ T2 A Okay. 13 I4 15 O. Novell Exhibit 294, which has been pre-admitted. THE COURT: Are you going to offer 293? !6 71 1B MR. JACOBS: Irm sorry. Thank you, Your Honor Offer 293 into evidence. THE COURT: Are you going object? 293 is received. 79 20 MR. SINGER: No. THE COURT: 2I aa MR. JACOBS: Thank Voü, Your Honor. (Novell Exhibit 293 received in evj-dence. O. A. O. Let's look at 294, Mr. LaSala. Yes. ) 23 24 25 294, now, is the letter from Mr. Tibbitts at 56 1 the general counsel- of SCO to you? A. Yes, rt is. ftrs dated February 5, the next 3 day after the February 4 letter from Mr. Bready. And 4 this letter outlines various -- makes several points to 5 Novell from SCO. The first was that it expresses SCO's 6 view that many of the questions that were asked in the 1 November 21, l-etter were outside the scope of Novell's audit rights. It asserts that the scope of the other points and questions raised in the body of the Novenlcer 9 10 2I letter were the resul-t of cooperation that we 11 allegedly had entered into with IBM in the course of this L2 Iitigation with SCO and then proceeds to respond, with 13 some specificity, to a couple of the points that were I4 raised in Mr. Breadyrs November 2I letter. 15 Essentially, Mr. Tibbitts is telling us that I6 whatever rights Novell may have under Section 4.16 of the I'7 Asset Purchase Agreement, with respect to the revenue 1B stream from the SVRX l-icenses that were in existence at L9 the time of the APA, those rights do not extend, he says, 20 to either the Sun or the Microsoft agreements. And he 2I cal-l-s the Sun agreement a new contract, and he cal-Is the 22 Mj-crosoft agreement a new agreement not covered by the APA in this l-etter. 24 O. And then, what was his response on intellectual .E property licenses for Linux? LJ 2 B 51 1 1 3 4 5 6 7 B A. Vüith respect to our request that SCO identify potential- intellectual- property licenses entered into under the new SCO IP license for Linux, he says that he says that that was not a ne\^/ SVRX license. O. Did -- at any point, in your back and forth with SCO leading up to this letter, did SCO ever, first of all, glve you copies of the Microsoft and Sun agreements? 9 A. O. No. 10 11 And did SCO ever say to you that those aqreements are not the subj ect of your rights under the I2 ]J Asset Purchase Agreement because they only incidentally l-icense SVRX? A. O. 291 ? 74 15 1,6 No. Letrs turn to 291 What is 29J, Novell Exhibit A. 291 is a March I, 2004 letter from me to 18 Mr. Tibbitts where I write, in response to the February 5 I9 letter that we just tal-ked about, and I point out what I 20 think is the bfindingly -- I make the blindingly obvious 2L point that it appears that the question at issue here is ¿z whether or not the Sun and Microsoft agreements are SVRX I1 23 24 licenses. And I refer Mr. Tibbitts to the fact that Novell- has reviewed SCOrs intellectual 25 property l-i-cense 5B 1 2 3 4 from its web site and made a conclusion that licenses taken under that aqreement woul-d be svRX l-icenses because 5 6 1 B 9 10 11 1-2 13 T4 of the definition of SCO IP thatts incl_uded in that Iicense, and then I make the point that we woul_d expecL the same to be true for the sun and Microsoft agreements but, of courser w could not be sure of that because they hadnrt yet been shown to us, and I reiterate NovelÌ's desire that SCO provide those agreements and any other intell-ectual property licenses for Linux agreements that SCO may have entered into. O. And did you -- and what kind of time frame did you put on that request? A. WeIl, I asked that they be provided immediately. MR. JACOBS: I offer 291 into evidence. THE COURT: 15 L6 1,1 Any obj ection? MR. SINGER: No objection. THE COURT: 29'7 1B is received. ) 19 20 (Novell Exhibit 291 recej_ved in evidence. 2I aa O. Let's turn to the next tab in the binder, Mr. LaSala, Novell Exhibit 303. 23 24 25 A. Yes. NoveII Exhibit 303 is another letter from me to Mr. Tibbitts, this one dated April 2 or roughly about one month later, and in it I simply point out to Mr. Tibbitts that Novell has received no response to the 59 1 March 1 l-etter reqarding the agreements which SCO has 2 3 4 entered into and express to him the view that Novell 5 6 7 B believes that we are deserving of a response and we would urge that he provide one promptly. O. And then, ât the end of the l-etter, vou say: If we do not hear from you shortly, we will infer that SCO has nothing to say in response. Do you see that? 9 A. O. I do. inferring at that point from 11 SCOrs non-resporise about whether the Sun and Microsoft I2 agreements represented SVRX licenses under the Asset 10 What were you 13 L4 Purchase Agreement? Well¡ we were beginning to try, in an 15 appropriate way, to put SCO on notice that, you know, we I6 were of the firm conclusj-on -- that we were trying to T1 verify that these ficenses were SVRX l-icenses, and we 1B were essentially saying that, if you're not going to 19 respond, you know, further, you don't really have 20 anything to say about that. 2I MR. JACOBS: I offer 303 into evidence. aa LZ THE COURT: 303 is received. 23 MR. SINGER: No objection. (Novel-l Exhibit 303 received in evidence. 24 25 O. Let's turn to the last exhibit in your binder, ) A. bU 1 Mr. LaSaIa, Novell Exhibít 3I1. A. Yes. z 3 4 5 6 '7 B 9 10 11 1-2 13 t4 lTJr -t T6 I1 1B I9 20 2I 22 23 24 LJ O. Vühat is 3I1? A. So, 311 is a November IJ, 2004 letter to Mr. Tibbitts from me. By this time, many months have gone by, and I point out to Mr. Tibbitts that we have had numerous communications with SCO regarding their handling of UNIX lj-censes and point out that we think that our audit rights under the Asset Purchase Agreement entitle us to these agreements and remind him that we sent him Ietters about this. And I point out to him, really for the first time, that we had noted recently that Sun had confirmed its plans to open source its Sol-aris operating system, and we knew, of course, that its Sun Solaris operating system was based on SVRX, the code, and we took note of the fact of Sunrs annoilncement to open source its Solaris operating system. And we outlined for Mr. Tibbitts, aqain, the rights that we believed that we had with respect to UNIX licenses in Section 4.L6 and that, voü know, SCO had no authority to amend the license that existed with Sun, which was a 1994, I believe it was, buyout of Sun's royalty obligations to Novel-I at the time. Arid we wanted to make SCO aware of that. 61 1 And then, finally, SCO we asked/ yet aqain, that ? 3 4 provide us with copies of any of the agreements, particularJ-y the Sun agreement in thís case, and somewhat fruitlessly, I included a deadline of Friday, December 3, 2004. 5 6 O. Now, in this letter you al-so cc'd the Senior Vice President and General Counsel at Sun Microsystems? B A. I did. And in the last paragraph of the 9 letter, I notified Mr. Tibbitts that we would be doing 10 that, and, of courser orr its facer we have done that. 11 And we also separately corresponded with Sun, advising I2 them of our point of view on these matters and requesting l-3 that Sun might be able to cooperate with us and provide t4 us a copy of the Sun/SCo aqreement. 15 O. And then, in the last paragraph of this letter, 76 you say -- you refer to putting Sun on notice of potential issues? r'7 1 1B 1\. YeS. O. What \^/ere you driving at? 20 A. We wanted to to make sure that Sun was aware of 2I what Novell's rights were with respect to the Asset 22 Purchase Aqreement and our view that. SCO lacked the z3 authority to enter into an amendment to the buyout 24 agreement, and we thought it was important, since Sun had 25 undertaken this initiative to open source its Solaris 19 6l 1 L operating system that they be a\^/are <¡f Novell's pos a ition . 3 4 Did you have aside from the legal concerns that you have referred to, did NoveII have a business O. 5 6 1 B concern about Sunrs open sourcing plans? 9 10 11 A. Very much so. By this time, Novell's intentions to enter into the Linux marketplace were welÌ known, and Novell's business was and running, and we had completed a major acquisition of an open source company. Vüe had established ourselves, we think, in the marketplace as one of the leading providers of Linux and open source technology. And the fact that Sun would take upon itself open source its Sol-aris operating system caused us some I2 13 to I4 15 T6 L1 1B business concerns/ sure. Did you ever receive a response to your November 7J, 2004 letter to Novel-l, Exhibit 3I1? O. à hTn I9 20 27 22 O. Sun and So, over the and then, àL some point, the 23 24 25 Microsoft agreements are produced in discovery. That happens. I'Il- just set the chronology. That happens in the winter of 2006. So, rlp until that point, did SCO ever comply with your request under these letters that it supply NoveII with the Sun and Microsoft agreements? 63 1 Z A. No. 3 A r O. Did it ever comply with the request pursuant to the audit provisions of the Asset Purchase Aqreement that Novell be allowed to audit SCO's compliance with the Asset Purchase Agreement as it rel_ated to the Sun and 5 6 1 B Microsoft A. aqreements? No. O. Did SCO ever tell you in any communications 9 outside litigation pleadings in the last year and a half 1_0 or sor that its theory was: These aqreements were not 11 SVRX ficenses as to which it owed you a payment I2 obligation because the SVRX h/as only incidental? 13 A. No. I4 15 76 MR. JACOBS: Thank you very much, Mr. LaSala. Are you going to offer 31-7? MR. JACOBS: Yes, Your Honor, 377, please. THE COURT: THE COURT: !1 1B Any objection? 317 is received. MR. SINGER: No, Your Honor. THE COURT: 79 20 (Plaintiff's Exhbit 3I1 received in evidence.) 2I 22 THE COURT: Thank you. Mr. Singer, you may cross examíne CROSS EXAM]NATION BY 23 24 25 MR. SINGER: O. Good morning, Mr. LaSala. 64 1 A. Good morning,. O. You had testified about the June 24, 2001 3 Ietter that you wrote Mr. McBride which has been 4 introduced as Exhibit 2L5, the first exhibit you were 5 asked about this morning. Do you recall that? 6 A. Yes. 1 O. Is it true, though, that you were aware of SCO!s plans to enqage in what we have referred to as 9 SCOsource licensing goíng back into late 2002? 10 A. I don't think my awareness went back quite that 11 far. Certainfy not by the name of SCOsource. 1"2 O. Well-, maybe not by the name of SCOsource, but 13 do you recall that{ in late 2002, there were 74 conversations between representatives of SCO and 15 representatives of Novell that -- where SCO indicated its 16 interest in l-icensing UNIX technology for use in Linux? I1 A. Yes. I'm aware of those conversations. 1B O. Okay. And, at any time between those L9 conversations and late 2002, and June 24, 2003, did you, ZV as general counsel, ever directly or by directing others, 2L tell SCO that it could not enqage in SCOsource 2 B aa z-L Iicensing? 23 z1 25 A. No. T don't believe \^/e did because we weren't sure exactly what the nature of the the SCOsource l-icensing program was, and we were trying to get a 65 1 2 3 O. A. And unlike the prior releases, this press release, been Exhibit l'73, was actually released to the public; right? ï dontt recall if the previous one had also I know we 4 5 6 7 released or not. briefed analysts and so on about the concepts in the previous release, but I know that this press release was released. O. And we can take a look at the highlighted portion SCOsource. I 9 in the míddle under the highlighted Again, when SCO announced the SCOsource program to 10 1_ t_ the public in .January of 2002, you again told the public what it was; right? A. O. A. O L2 13 L4 1_5 ,January Excuse of 2003? ,-Tanuary me. 2003. You told the public what it was; right? YeS. L6 . And what you said uras, again: SCO's L7 18 patents, copyrights and core technology UNIX source date back to :-969 when Bel1 Laboratories created l-9 20 the original will manage code. SCOsource the licensing of this software 2t 22 23 24 25 technology. Correct? A. Yes. And basically v/e're saying wetre providing UNIX SCO had licenses of SCOrs intellectual property including our intellectual property as well as other patents that 90 1 related to other technologies within the O. A. O. A. O. A. O. A. UnixWare company. 2 3 And that technology dates back to Bel1 Laboratories in l-969; correct? Not all of the technology. 4 5 6 7 But Yes. some of it does; correct? And that was with SCOsource? Yes. I 9 And thatts what SCOsource sought to license in 10 l_1 SCOsource program; correct? WeIl, in general \^re were licensing the most recent licenses, source code UnixWare licenses as well who were concerned about as 12 13 1,4 versions of SCOrs intellectual property mostly in the form of developing an intellectual property licensing program related 15 T6 to customers intellectual property issues with their use of I-.,inux, such as the runtime libraries and OpenServer UNIX. L7 l-8 O. A. O. A. O. But you wanted to mine this entire body of That was my understanding of the intellectual 19 20 21, intellectual property; right? That was the pIan. property body that we had rights to license. Going back to L969; right? 22 23 24 25 Correct And this was what you hoped you would make millions of dollars licensing; correct? 9L 1_ A. Vüell, mostly around the latest versions of the 2 3 int,ellecLua1 property. But the whole body at work is part of the buildup and legacy of that intellectual property and 4 5 6 7 library. O. No\n/, if you take a look L73. 1et me go back, I'm sorry, to Exhibit L73. Under A. Take a look down at the bottom, if you would, sir, I 9 l_0 the Yes. SCO System V for l-,inux. Do you see that? o. And we have SCO it up on the screen now. 11 L2 13 L4 1_5 told the public you r^/ere announcing this in SCO's UnixVüare and OpenServer UNIX .Tanuary of 2003: In the past license agreements did not allow these libraries to be used outside of systems. SCO's operating L6 L7 1_8 Correct? A. O. Yes. V'IiLh L9 20 2L 22 23 24 25 this announcemenL, customers can nor,tt run Lhese libraries from SCO for use with Linux without having to license the entire Correct? SCO operating system. A. O. Yes. So that means you get access to this core UNIX SCO technology that believed it owned without having to 92 1 A. a. Yes. z 3 4 5 6 1 B 9 10 1_1 72 13 Mr. Acker, paraphrasing, whether, to your understanding, SCO had the right to Iicense the prior System V products with the UnixWare Iicense. Do you recall that question? A. Yes. O. Mr. Sontag, I want to show you language from, again, amendment 1 to the APA, which provides as follows: Buyer, Santa Cruz, shall have the right to enter into amendments of the SVRX licenses as may be incidentally invofved through its rights to sell and license UnixVüare software. You were asked by Do you see that? I4 15 A. A. Yes. And then, dt the bottom, it says: 76 t'7 1B 1,9 Buyer shall not enter into new SVRX licenses except in the situation specífied in little tri. " Do you recall reviewing this language during your tenure at A. O. Yes. SCO? ZU 27 Do you recall forming a view as to what it 22 23 24 meant for SCO to have the right to lj-cense SVRX material incidentally A. that right. to licensing UnixWare? that SCO had That was the basis of my belief 25 180 1 2 3 4 6 6 1 B 9 10 11 L2 13 1,4 Itr .LJ this language earlier, Mr. Sontag -- well, the first paragraph, the letter in which Mr. Luehs, I think it is, says that the aqreement between santa cruz and Novell requires prior written approvar from Novell for all new aqreements or changes to current agreements relating to System V. Do you see that language? A. Yes. O. Is it your understanding that if Santa Cruz was executing a unixware license that it dídn't need to get Novell's approval to license SVRX materi-al with that O. You were shown UnixWare l-icense? A. O. correct ? That was my understanding. Now, this document is dated \Lay 20, 1996, Yes. I6 I1 1B A. 19 20 2L aa aa 23 24 25 O. This is a letter from Novefl three days later, May 23, 1996, in which Novel_l says that it has transferred to sco NovelI's existing ownership interest in uNrX system-based offerings and related products. Do you see that Ianguage? A. Yes. O. Was it your understandinq, during your tenure at SCO/ that SCO could license UnixWare however it wanted? lB1 1 2 3 4 6 Yes. That was my understanding. O. And was it your understanding that SCO could license system v products with unixware? was that your understanding? A. A. Yes. 6 1 B 9 10 11 I2 13 I4 15 I6 I1 1B 19 20 2I 22 23 24 25 O. You were asked about the Microsoft aqreement. Do you recal-l that? A. Yes. O. And, aqain, in sutnmary/ can you tell- me how it came to be that you ended up in negotiations with Microsoft reqarding that ag,reement? A. In early 2003r wê came in contact with Microsoft representatives who were interested in pursuing a possible l-icense to unixware technologies to use in some of their, what they cal_l_ed UNIX-compatibitity products within Microsoft windows. rt started a set of negotiations that occurred through the earry part of 2003 culminating in the UnixWare Iicense agreement with Microsoft. O. Now, in the time leading up to the beginning of those negotiations, had sco made any public statements or assertions that there was any sco rp in any Microsoft products ? I believe there had been some, you know, broad discussíon that there might be rp issues, and not only in r82 A. under its standard commercial Iicense for UnixVrTare, whether SCO licensed prior System V products? 4 q 6 B 9 10 11 72 f know that in the UnixWare source code aqreement that was provided, up until the most recent versions of the unixware source code agreement, that the prior versions were specificalry listed. rn the most recent version of the unixware license, that was omitted only for the purpose of reducing the size of the agreement, but my understanding is that it was stitl provided to a customer if they requested it, and it was ímplicitly included. O. was ? A. Do you have an understanding as to why that 13 L4 A. Because that was the standard practice of SCO 15 and its predecessors in terms of licensing the UNIX I6 software, that source code licensees of different 1'1 versions coul-d interact with each other or share code in 1B certaÍn cases, if they were of a similar licensing level, 79 and that was enabled by the fact that they would be 20 licensed to al-l prior versions, depending on the version 2T they licensed at that point 22 So, that was a standard practice that had been 23 used by SCO, by NovelÌ, by AT&T, USL and part of the 24 Iicensing of the UNIX code, and it continued with tq UnixWare. L96 1 2 3 4 a series of agreements towards the end of Mr. Acker's questions, and I think we can safely lump those together and call them SCOsource O. You were shown agreements. Do you recal_l- doing that? 5 6 A. O. Yes. How did you come about arriving at a price for 1 B these SCOsource agreements? 9 10 11 A. I -- we determined that we wanted to price it basically at the same price as UnixVrlare, so a comparable capability of UnixWare, if it was a 1-CpU system, was priced at, you know, $1400, which was the same price for UnixWare. t2 13 74 15 Oh, I had gotten input from John Maciaszek and also from Jeff Hunsaker, who were more familiar with the UnixWare O. A. And who did you speak with on that issue? 76 T1 1B 1.9 O. Iicensee A. O. 2I what the 22 A. 20 23 LA covenant price list than I was. Now, was there any source code given to a under a SCOsource license? No, there was not. Coufd you describe, to the best of your vi_ew, license was in the SCOsource license? It was primarily a release, aspects of a not to sue and a Unixware license and SCO Ip Now, you were shown the phrase in several of r91 .A license. 25 O. 1 the agreements, quote, SCOrs IP rights. that ? Do you recalf 2 3 4 6 A. Yes. 6 1 B 9 10 11 12 1') l_J T4 15 L6 O. In these SCOsource aqreements, did SCO purport to release anything other than its rights? A. No, \^ie did not. a. Did SCO purport to license anything other than its rights? A. No. O. You were shown NoveII Exhibit 221. This is the Jeff Hunsaker e-mail. Do you recall that? A. Yes. O. And in that e-mai], Mr. Hunsakerrs says that this is not a Unixware 1.73 SKU. Do you recall that? A. Yes. O. Do you know what SKU is? A. Stock-keeping unit or a box of software, in this case O. A. O. Licenses for purposes of stock keeping? No. They were a separate package and agreement SKU. I'7 1B UnixWare I9 20 Were these SCOsource agreements simply UnixVrTare 2! 22 ZJ and separate Now, you were asked further about 24 25 Mr. Hunsaker's statement that If we could pull it up. 198 I 2 3 STATE OF UTAH. ) ) COUNTY OF SAI,T ss. T,AKE ) 4 5 6 1 8 9 I, KET,LY BROVüN HICKEN, do hereby certify that I am a certified court reporter for the Stat,e of Utah; That as such reporter, I attended the hearing of the foregoing mat,ter on April 29, 2008, and thereat reported in Stenotype all- of the testimony and proceedings had, foregoing pages number from 77 through 1-44 and caused said notes to be transcribed into tlpewriting; and the l-0 11- constitute a fuIl, true and correct report of the That I am same. L2 1_3 not of kin to anY of the parties and have set hand and seal- , trris à4 no interest in the outcome of the matter; L4 15 L6 1-7 1_8 ñfr"L And hereby 2008. my 'tv--. day of L9 20 BROVüN HICKEN, CSR, RPR, t& RMR 2L 22 23 24 25 1,45 1 z 3 4 REPORTER I S CERTIFICATE STATE OF UTA]] ) ) COUNTY OF SALT LAKE ) ss 5 6 1 B It REBECCA ,IANKE, do hereby certify that I am a 9 1_0 11 T2 13 74 15 Certlfied Court Reporter for the State of Utah; That as such Reporter I attended the hearing of the foregoing matter on ApriL 29, 2OOB, and thereat reported in Stenotype all of the testimony and proceedings had, and caused said notes to be transcribed into typewriting, and the foregoing pages constitute a fulI, true and correct record of the proceedíngs transcribed; I6 L1 1ô -LO L9 ¿U not of kin to any of the parties and have no interets in the outcome of the matter; And hereby set my hand and seal this 29th day of ApriI, 2008 am That I 2I 22 23 24 25 REBECCA 201 1 L TN THE UNITED STATES D ]STRICT COURT a FOR THE DISTRICT OF UTAH, CENTRAL D]VISION 3 4 THE SCO GROUP, 5 b 7 B corporation, fNC., a Delaware Defendant, VS. Plaintiff and Countercl-aimCase No. 220A-CV-139 dak 9 10 11 NOVELL, INC./ a Delaware 'corporation, Defendant and Countercl-aim- t2 13 L4 Plainti ff . GOPY BEFORE THE HONORABLE DALE 15 T6 A. KIMBALL 71 1B DATE: MAY I, 2008 REPORTERIS TRANSCTIPT OF PROCEEDINGS I9 20 TR]AL TRANSCRIPT VOLII}4E I ] I 2I 22 23 24 LJ Reporter: REBECCA JANKE/ CSR/ RMR KET.LY BROWN H]CKEN, CSR, RMR ac 420 1 APPEARANCES FOR NOVELL: MORRISON 2 3 4 & FOERSTER LLP ESQ. BY: M]CHAEL A. JACOBS, EIRC M. ACKER, ESQ. 5 6 7 B DAVID E. yIELAUGH, ESQ. 3625 MARKET STREET SAN FRANCTSCO, CAL]FORN]A 94105 9 10 11 72 l_3 FOR SCO: BOIES, SCHILLER & FLEXNER LLP BY: STUART EDVüARD H. SINGER, ESQ. J. NORMAND/ ESQ. I4 15 JASON CYRULNIK, ESQ. 76 L1 1B 401 EAST LAS OLAS BLVD, SUrTE 1200 FORT LAUDERDALE/ FLORTDA 33301 T9 HATCH/ JAMES 6, DODGE, P. C. 20 2T a ¿ô z BY: 10 BRENT O. HATCH/ ESe. SUrrE 400 WEST BROADWAY, SALT LAKE C]TY, UTAH 84101 23 24 25 42r 1 MAY r, 2008 SALT LAKE CITY, UTAH 2 3 4 5 PROCEEDINGS *** THE COURT: Good morning. ALL ATTORNEYS: Good morning THE COURT: You may 6 1 B MR. NORMAND: call your next witness. Yes, Your Honor. William Broderick MR. NORMAND: May I approach, Your Honor? THE COURT: Yes. Come 9 1_0 11 T2 forward and be sworn, please, right here WILLTAM BRODERICK, in front of the cl-erk of the Court. 13 74 the witness hereinbefore named, being first 15 duly cautioned and sworn or affirmed to tell the truth, I6 the whol-e truth, and nothÍng but the truth, was examined L1 and testif ied as foll-ows: 1B THE CLERK: Please state your name and spell it 19 for the record. 20 2L THE WITNESS: Wil-liam Broderick B-r-o-d-e-r-i-c-k D]RECT EXAMINATION 22 23 24 25 BY MR.' NORMÄND: O. A. Good morninq, Good morning Mr. Broderick. 423 1 Q, Group? What is your current position with the SCO 2 3 4 5 6 1 B 9 10 11 T2 I'm the Director of Software Licensing. O. And how long have you held that position? A. Since with SCO, since Cal-dera bought the business from the Santa Cruz Operation. O. And could you briefly describe your responsibilities in that position? A. I'm responsíbl-e for all contract and l_icensing activities. O. And how J-ong have you had those responsibilities at SCO? A. Since I moved over to SCO from the Santa Cruz Operation. A. 13 L4 did you do at Santa Cruz? L6 I did contracts and licensing. I1 O. How did your responsibilities there compare to your responsibil-ities at SCO? 1B I9 A. They are exactly the same. f just continued to 2o do the same work with the same people. 27 O. And whaL did you do before you were at Santa 15 O. A. What z¿ Cruz? z5 24 25 A. f was at Novel]. And what r^rere your responsibilities at Novell? O. A. At NoveJ-l, when Novell first merqed or bought 424 1 2 3 4 the UNIX business from USL, I was Manager of Sales Operations, but it was a month or two after Novelt bought us, I moved to the contracts grouþ, and then f was the contracts manager. O. 5 6 1 8 And what I^/ere your responsì-bilities at NovellA ? Contracts and Iicensing of the UNIX business. O. 9 ^ O. 10 11 did you do before you went to Novel]? I was at the UNIX Systems Labs. Vühat did you do there? Vrlhat A. I was Manager of Sales Operations. And what were your responsibilities there? I2 13 I reported to the Vice president of Sales, and I4 r handled the sares compensation ptan forecasting; safes 15 compensation plan, forecasting. If issues came up with 16 the sales force, a lot of times I was direct.ed to try and l1 1B O. A. sol-ve those. O. How have your responsibilities in all t.hose positions pertained to UNIX? L9 20 A. It was all UNIX. 27 Why is that? O. ')) A. Well_ UNIX System Laboratory owned the UNIX 23 technology and the business, and when they merqed with 24 Novell, Novell bought that business from Santa Cruz, and 25 we worked in Novell-'s 425 1 2 3 4 ft was the Novell UNIX Group. And then when Novell sotd the business to Santa Cruzr w moved into Santa Cruz's legal department and worked contracting UNIX. O. You were part of the UNIX Group A Wac 5 6 1 B at Novel-l-? V{hat happened to the UNIX Group O. after the transfer of assets from Novell to santa cruz in 1 995? A 9 10 11_ O. to the UNIX Group? What happened to the UNIX Group? The UNIX Group, I thínk in its entj-rety, What happened went to Santa Crvz. 13 O. How did your responsibilities chanqe, Lf at I4 all, when you went from Novell to Santa Cruz? 15 A. Santa Cruz was doing at that timer we were T6 doing more of the packaged product, the binary business, L1 so we \^/ere working with not only oEMs that were licensing 1B source code, but we were dealing with distributors, a lot 1,9 of resellers of the packaged products, and we were doing 20 aqreements f or those al-so. 27 O. What are OEMs? 22 A. OEMs are original equipment manufacturers. 23 They are the computer manufacturers, Hewlett-packard, T2 .A L.j IBM/ Compac. The people that build the computers are OEMs 25 426 1 2 3 4 did your responsibitities change, Lf at alJ-, when the assets went from Santa Cruz to Caldera in O. How 200I? 5 6 '7 B , ãt Santa Cruz, there \^/ere a number of peopJ-e that did contracts rel-ated to the UNIX business, and when I went to Cal-dera, I won it al-l-. O. And, at some point, Caldera chanqed its name to The SCO Group, Inc.,. is that right? Wel-l ^ A. 9 Yes. How 10 11 O. did your responsibilities change, if at all, upon that name change? T2 A. Not at all-. But there was a period f rom 13 Augustt 2002t until ApriJ_ of 2003 where I wasn't an 1"4 employee of Santa Cruz, f went to another company/ but I 15 continued to do consulting with sc], on the contracts, but I6 essentially my responsibilities changed not at aIl. 11 O. You mentioned OEMs earlier. What kind of fees 1-8 or payments did OEMs make for the UNIX products that you 19 have been describing? 20 A. The source code products? 2t 22 23 .A ¿1f 25 O. Yes A. There was a one-time fee, right to use fee that paid for the source code, and that gave them the ríght to put it ori an initiaÌ designated CpU. And a deslgnated CPU, that's a computer. So they could put the source 421 1 2 3 4 referring to? A. Yes. MR. NORMAND: Coul_d we qo to Bates number I299956. Have you seen 5 o 1 B that document before, 9 Mr. Broderick? A. Yes. O. Itrs a memo, attention to Steve Sabbath. Who was Steve Sabbath, as of November 22, tggs, what was his position ? 10 11- 72 13 L4 Steve Sabbath was General Counsel for Santa Cruz Operation. A. O. A. Operation. And who was Kelly Hicks? Kelly Hicks was the controll_er for Santa Cruz Would you go 15 t6 I1 18 O. A. to the next page. Signed by Lou Ackerman. Who was Lou Ackerman? Lou Ackerman was my manager when f was at !9 20 Novel-I as a contract manager. He was Manaqer of the Contracts Group. 2I 22 z3 24 25 this language at the bottom of the first page in the memo from Mr. Ackerman: Would you also please confirm that SCO intends to use the standard software agreement and sub1icensing agreement currentl-y used by NoveIl, with exception to the O. Do you see 436 1 necessary name and address changes for any new customers Do you see 2 3 4 that language ? A. O. Yes. How does that language compare to your 5 understanding of what Santa Cruz was going to be doing in 6 the transition? 1 A. WeIl_, ì-n the transition, alt documents went ö from Novel-l- to Santa Cruz. We kept all of our computers. 9 ltüe had al-] of the agreements in word processing on our 1_0 computers, and all we did was go in and do a global 11 change, Novell to Santa Cruz 72 O. I wonrt read those out loud, Mr. Broderick. 13 You can see them. How do those directives from 74 Mr. Ackerman compare to your understanding of what was to 15 be done on the transition? I6 A. AgaJ-n, ít was the same idea. We had a UnixWare L1 2.0 schedul-e with Novell, with NoveII's name in it, and 1B \^/e did a global change with the name from Novel-t to santa 79 Cruz and changed nothing eIse. 20 O. Do you recogníze this document, Mr. Broderick, 2I SCO Exhibit 1I? 22 A. Yes. 23 O. What is the document? 24 A. f trs amendment number l_ to the Asset purchase z5 Agreement. 431 If we couJ-d go to page 6. This is the Z J-anguage, Mr. Broderick, in which the parties state that 3 buyer shal-l have the right to enter into amendments of 4 the SVRX licenses as may be incidentally involved to its 5 rights to sel-1 and license UnixWare software. 6 Do you see this language? 1 A. Yes. I 0. This provision qoes on to state that buyer 9 shall- not shall have no right to enter into new SVRX 10 licenses, except in the situation specified in littte I'i'r 11 of the preceeding sentence or as otherwise approved L2 Do you see that J_anguage? 13 A. Yes. T4 O. Do you recall discussing this language during 15 the transition period from Novel-I to Santa Cruz? 1 O. I6 I1 1B /\. YES. L9 20 27 22 23 24 25 Iiüell, ín the transitlon team, we were told that Novell- was selling the business, butr âs part of the purchase price, they \^/ere goíng to get the onqoing stream of royalties for what was defined as the SVRX products that \^/ere transferred from Santa Cruz to Novell. We coul-dn't do anything that jeopardized that revenue stream. It was essentially money in the bank for Novell. .And we couldn't enter into new licenses for the 438 O. A. And what do you recall about that? 1_ 2 3 4 5 6 1 B products. And what that meant was -- what they didn't want Santa Cruz to do was you had a licensee who had an svRX product from Noverr. what we courdn't do is go to that l-ícensee and say: you know, you're paying a hundred-dotlar-royalty-per-copy fee. If you execute a new l-icense with us, Santa Cruz, we'l_J_ charge you a SVRX $50-per-copy fee. We couldntt do anything that took away that 9 royalty stream that Novel] \^/as to get. What they said is 10 but we could ]icense the svRX incidentarty. And we said: WeIl, what's "incidentally?" I2 And they said: Well_, the major part of this, 13 if you take a 1ook, if you license the source code, the 14 source code license fees, from when they first started 15 being used,. always incl_uded prior products of the Iegacy 76 products. You wiII continue to use those same types of I1 l-icenses. You'11 continue to include that legacy prior products. And that's an example of an incidental- right 1B L9 O. Arrd did, in fact, Santa Cruz continue to 20 license prior products with its UnixWare l_icenses? 2L A. Yes, h/e did, because what we did is we changed 22 the name from Novel-l to Santa Cruz. The rest of the 23 l-icense was to remain the same, and the licenses had 24 prior products, and it's the way source code was licensed 25 from the early 'BOrs. 1_1 : 43g 1 2 3 4 q this transition period completed? I believe we became Santa Cruz employees on February 1, r96. 0. Do you recognize this document, SCO Exhibit i-4It Mr. Broderick? O. A. When was à Vac 6 7 B 9 O. And could you describe what the document is. A. Itf s aqain, it's a suppJ_ement licensing order form, NCR corporation, l-icensed unixware 2.r source code from SEL, Santa Cruz. 10 11 O. And if we go to page 24. And do you recognize T2 this part of the document, Mr. Broderick? 13 A. Yes. I4 O. And what is it? 15 A. Ttrs the listing of the prior products where we granted rights to access the legacy products that T6 1-1 UnixWare was ultimately built on. 1B O. What supplement number ís this, Mr. Broderick? I9 A. r72. 20 2L 22 O. And have you had occasion to go back and consider some of the other types of supplements that predated this supplement? 23 24 25 A. In my 15 years of doing lì_censing, I'm awa¡e of how the supplements are numbered, how they worked O. Specifically to NCR, have you had occasion to 440 1 O. So with respect to, sây, the libraries just as an 2 3 example, the traditional tlpe of UnixWare license would allow you to use those libraries in what context? 4 5 6 7 B A. LINIX V'Iell, you would use those libraries on a Linux deployment for those customers that were trying to migrate applications to Linux. So they would purchase a license UNIX in order to run those Linux -- those applications, applications on Linux. O. the SCO 9 And just to clarify that, what was allowed under t-0 source li-cense? Correct. And under a pre-SCOsource 11 A. O. A. license. o. t2 l-3 1_4 license, UnixWare license, would that be allowed? No . No. Once again, you couldn't unbundle the SCOsource lP 15 1,6 1,7 technology. And so that's why we developed the I believe you characterized these agreements in that always your understanding of the SCOsource 18 your ansr^rer, a couple of answers ago, âs tlpes of unixlrÏare t9 20 2L 22 23 24 25 licenses. agreements? Vüas A. a. SCO Yes. I'd like to show you what's been marked as be Exhibít 236. And again, it's in your binder and willDo you recognize SCO on the screen in a moment. Exhibit 236? s60 1- A. O. A. A. Yes. A press release that we issued in July Yes. 2 3 UNIX and our copyrights and so forth. And again, ürere you involved j-n issuing these press 4 5 6 7 releases or creating or reviewing these press l-eases? Primarily reviewing the press releases for content. I'd lj-ke to zoom Did not author every word of the documents, no. in on the bottom third of the I 9 t_0 l- press release that begins: Following the distribution of our letter. A. O. Uh-huh (affirmative) And press release quotes Mr. McBride saying: Today we're 1_ L2 13 delivering a very clear message Lo customers regarding what they should do. I4 l_5 1,6 Intellectual property is valuable and needs to for their UnixWare be respected. and paid for by corporations who use it or¡'rn commercial benefits. The new a I7 t_8 license accomplishes that objective in way. fair and balanced A. O. Yes. L9 20 2L 22 23 24 25 Is that an accurate reading? And does the language of that press release, is that. consistent with your recollection that you had always termed this UnixV,Iare license? A. Yes, absolutely. The SCOsource program was all UnixWare s61_ built on our UnixWare l-icenses built around a 1 2 3 4 5 6 7 Iicense. O. Now, Mr. Hunsaker, you had testified weII, I think you said it was UnixVüare license. It was different from the traditional UnixVùare license. Can you elaborate on the specific difference between the UnixWare license, traditional UnixVüare license and the SCOsource UnixT¡üare license? A. tradit.ional other SCO WeII, one is the target audience, I mean, for the UnixT¡,Iare I 9 1_0 license, it was sold to SCO SCO customers and customers and new customers that we wanted to on run our UnixWare technology on, our OpenServer technology 1_1 l their hardware. And it included a packaged product. It incl-uded a manual . L2 1_3 l It included CDs. It incl-uded and registration, cards. It included a license agreement. And so it was physicalfy a packaged product that was delivered installed and it was ready to use. IP license, while it's based on the same technology of Unj-xWare, j-t was focussed On SCOsource L4 t_5 1,6 the other hand, a L7 18 L9 2o 2L 22 23 24 25 for Linux customers that just wanted to be made clean and one against ensured them that we $/ere not going to sue them. And it didn't hawe anything to insta11. There was nothing physical to it. ft was simply a license that allowed them to run this in that instance. There hras no manual or other t.hings that Irve talked about. a. l,et me direct you to Novell, what wetve marked as Novell Exhibit 227. And if you'11 briefly review that. 562 1 2 3 4 5 6 7 Do you recognj-ze this document? A. O. exchanges Yes. And the document appears to be a series of e-mail that involved either you sending or receiving Correct. Could you turn to Page 2, please, of the document, e-mails? A. a. I 9 Novel1 227. And I'd like to focus j-n on the e-mail that you sent on ,Ju1y 3l-st of '03. Do you see that second half of the page? 10 11 T2 1_3 A. Yes. o. And if you can specifically look at the line that 1-. begíns, Item A. 1,4 Okay. 15 L6 1,7 o. A. O. You were the author of this e-mail? Yes. Yes. It says my name. The official name And, Mr. Hunsaker, you wrote on .Iu1y 3l-st of t03: 18 of this program will be the 19 20 21, SCO UNIX IP compliance license program. This is SKU. not a UnixWare 7.1.3 A. Yes. 22 23 24 25 o. A. Mr. Hunsaker whatts an SKU? SKU or SKU is. defined as a stock keeping unit. ftrs more of a manufacturing operational term designed to categorize or name a particular product. ft's a unique 563 l_ STATE OF UTAH ) 2 3 ) COUNTY OF SALT ss. ],AKE ) 4 5 6 7 B I, KELLY BROWN HICKEN, do hereby certify that I am a certified court reporter for the State of Utah; That, as such reporter, I at,t,ended the hearing of the foregoing matter on May 1-, 2008, and thereat reported in Stenotlrpe all of the testimony and proceedings had, and caused 9 said notes to be transcribed into typewritirg; and the foregoing pages number from 503 through 636 constitute a fuI1, Lrue and correct report of the same. 10 11 L2 l-3 L4 That I am not of kin to any of the parties and have set my hand and no int,erest in the outcome of the matter; And hereby seal, this l-!a^y ot 15 L6 fnúr'Yt/ ----cr 2oog. t7 l_8 L9 20 2L 22 23 24 25 HICKEN, CSR, RPR, 1{)'l^ t, RMR 636 1 2 3 4 REPORTERI S CERTTFICATE STATE OF UTAH ) ) COUNTY OF SALT LAKE ) ss. 5 '7 I, REBECCA JANKE, do hereby certify that I am a B Y 10 11 L2 13 T4 Certified Court Reporter for the State of Utah; That as such Reporter I attended the hearing of the foregoing matter on May r, 2008, and thereat reported in stenotype arl of the testimony and proceedings had, and caused said notes to be transcribed into typewriting, and the foregoing pages numbered 420 through 4gg constitute a full, true and correct record of the proceedings transcribed. 15 That I am not of kin to any of the parties and I1 have no interets in the outcome of the matter; 1B And hereby set my hand and seal_ this May I, 76 19 20 27 2008. 22 23 24 25 503

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