SCO Grp v. Novell Inc

Filing 859

NOTICE OF FILING OF OFFICIAL TRANSCRIPT for dates of March 12, 2010-Jury Trial before Judge Ted Stewart re 567 Notice of Appeal,. Court Reporter/Transcriber Patti Walker, CSR, RPR, CP, Telephone number [phone]. NOTICE RE REDACTION OF TRANSCRIPTS: Within 7 business days of this filing, each party shall inform the Court, by filing a Notice of Intent to Redact, of the parties intent to redact personal data identifiers from the electronic transcript of the court proceeding. The policy and forms are located on the court's website at www.utd.uscourts.gov. Please read this policy carefully. If no Notice of Intent to Redact is filed within the allotted time, this transcript will be made electronically available on the date set forth below. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 5/10/2010. Redacted Transcript Deadline set for 5/20/2010. Release of Transcript Restriction set for 7/19/2010. (Attachments: # 1 Part Two, # 2 Part Three)(jmr) Modified on 4/20/2010-added text (jmr). Modified by removing restricted text on 7/19/2010 (rks).

SCO Grp v. Novell Inc

Doc. 859

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IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware corporation, Plaintiff,

) ) ) ) ) ) ) Case No. 2:04-CV-139TS

NOVELL, INC., a Delaware corporation, Defendant.

_________________________________) AND RELATED COUNTERCLAIMS. )

_________________________________)

BEFORE THE HONORABLE TED STEWART --------------------------------March 12, 2010 Jury Trial

REPORTED BY: Patti Walker, CSR, RPR, CP 350 South Main Street, #146, Salt Lake City, Utah 84101

Dockets.Justia.com

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1 2 3 4 5 6 7 8 9 10 11 12 13 For Defendant: 14 15 16 17 18 19 20 21 22 23 24 25 For Plaintiff:

APPEARANCES

Brent Hatch HATCH JAMES & DODGE 10 West Broadway, #400 Salt Lake City, Utah 84010 Stuart Singer BOIES SCHILLER & FLEXNER 401 East Las Olas Blvd., #1200 Fort Lauderdale, Florida 33301 Edward Normand BOIES SCHILLER & FLEXNER 33 Main Street Armonk, New York 10504

Sterling Brennan WORKMAN NYDEGGER 60 East South Temple, #1000 Salt Lake City, Utah 84111 Eric Acker Michael Jacobs MORRISON & FOERSTER 425 Market Street San Francisco, California

94105

567

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ty Mattingly Witness William Broderick

INDEX Examination By Mr. Normand Mr. Acker Mr. Normand Mr. Acker Mr. Singer Mr. Brennan Mr. Singer Mr. Brennan (Direct cont.) (Cross) (Redirect) (Recross) (Direct) (Cross) (Redirect) (Recross) PAGE 574 620 655 668 671 695 759 759

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EXHIBITS RECEIVED INTO EVIDENCE Plaintiff's: 167 3 592 22 213 706 487 488 168 570 83

PAGE

Defendant's: N-13 and T-13 L-7 H-6 G-4 O-45 628 648 651 691 723

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SALT LAKE CITY, UTAH; FRIDAY, MARCH 12, 2010; 8:30 A.M. PROCEEDINGS THE COURT: Good morning.

Counsel, I am prepared to rule on the O'Gara deposition designations unless one of you feels you need to address it here orally. MR. BRENNAN: ruling is. Your Honor, it depends on what the

Perhaps I should wait. THE COURT: So do you want me to give you my

ruling and then let you argue it? MR. BRENNAN: Perhaps your sense, and if I need to

say anything after that, I'll raise my hand, if that's fair. THE COURT: MR. BRENNAN: THE COURT: any of you? MR. HATCH: As I understand it, we're down to just I don't think you need to stand. Thank you. Mr. Normand, Mr. Singer, Mr. Hatch, do

the third set of designations and, of course, one is that they be able to -- again, back to the discussion that's already there. You know, the jury is going to be able to Any prejudice from what has already So it's just cumulative,

draw its conclusions.

been agreed to could be in there. for that matter.

We're obviously very concerned about the I think not having the .com It makes it easy to see, and

mention of specific sites. doesn't really improve that.

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it is a particularly sensitive matter, as we discussed previously with Your Honor and Your Honor indicated as well. THE COURT: Thank you, Mr. Hatch.

Counsel, the Court is going to allow providing to the jury those designated portions of the O'Gara deposition that are in dispute and found at pages 64, 66, 67 and 69. The Court will note that, in its opinion, the probative value of this testimony does far outweigh the prejudicial value. There is prejudicial value. I

understand your argument and I also understand the reference to Groklaw would be of some concern, but the Court is more concerned that they are looking at The Salt Lake Tribune or some other source. I don't believe making reference to an

obscure Web site name without it being designated necessarily as a Web site, per se, is going to somehow or another draw attention to this jury to go look at, particularly in light of the instructions the Court has given. I think this jury is being very careful and I

believe that the risk is rather small that that is going to result in any type of violation of the instructions of the Court. Mr. Hatch. MR. HATCH: Yeah. My only comment to Your Honor

would be I think, on this matter, that is hardly an obscure site because I think if you type in the names of the

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parties, it's one of the first things that comes up with pretty much any search engine. THE COURT: I understand that, but, again, they

could be looking at much more readily available sources than that. So, counsel, I do have to ask you, we received yesterday -- well, I guess it was -- it was received yesterday, the petition for writ of certiorari in the above entitled cases filed on March 4th, 2010, and placed on the docket of the United States Supreme Court on March 8th. Do

you have any sense for whether or not this matter is going to be taken by the Supreme Court, thus make this trial moot? MR. SINGER: Your Honor, it's our view that it's

remote that the Supreme Court is going to take writ certiorari from the Tenth Circuit's opinion. First of all,

it's a nonfinal decision -- not in the sense that it isn't a final decision of the Tenth Circuit, but just for the reason that this case has simply been remanded for trial, and after that trial the issue will go forward, if necessary, to the Tenth Circuit and parties have the rights to go beyond that. But, second, this is a case where there was no dissent on the Tenth Circuit panel. by Novell to stay the mandate. There was a motion made There was

That was denied.

a motion to the Tenth Circuit for en banc reconsideration. That was denied with apparently no judge in active service

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thinking that it should be reconsidered.

We do not believe

that there is a circuit court conflict on this issue. And for all those reasons, we think the odds of the Supreme Court will take this case are low, and, of course, the odds that the Supreme Court takes any case are very low. THE COURT: Mr. Jacobs. MR. JACOBS: Your Honor, I certainly agree with Thank you, Mr. Singer.

the last point Mr. Singer made, the odds of any certiorari petition being granted are low. have the opposite view. certiorari petition. On all the other points, we

We set them forth in your

We haven't moved for a stay because,

frankly, I think I would have a hard time persuading the Court just, given the odds, that the Court should stay this trial pending the writ -- petition for writ of certiorari. SCO's response is due I believe April 8th to the petition, sometime in April, so the Supreme Court's consideration of this is going to take into April or May. MR. SINGER: extension of time. We would likely, Your Honor, seek an

Novell sought two extensions of time I

that were granted by the Court in filing its petition. think, given that we're sort of tied up for the next few

weeks, the court might deem a short extension of time to be reasonable.

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THE COURT:

So neither one of you are saying we

ought to quit and go home then? MR. SINGER: That's certainly our position, Your

MR. JACOBS: enjoying ourselves. THE COURT:

That's correct, Your Honor.

We're

Do either of you have anything else

before we bring the jury in? MR. SINGER: MR. BRENNAN: Ms. Malley. Counsel, I'm assuming that these rather intimidating white packages over here are the depositions that will be read today; is that correct? MR. ACKER: No, Your Honor. I think those are Mr. Not from the plaintiffs. No. Thank you, Your Honor.

Broderick's prior trial testimony and deposition testimony. It's just potential for purposes of impeachment of Mr. Broderick. THE COURT: MR. NORMAND: in Mr. Broderick now? THE COURT: Yes. Have him come in, but don't have Okay. Thank you.

Your Honor, do you want us to bring

him yet take the witness stand, please. (Jury present) THE COURT: Good morning, ladies and gentlemen of

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the jury.

I would remind you that we, yesterday, had Mr. We'll continue with his

Broderick as a witness. examination.

And, Mr. Broderick, if you would please come forward and re-take the witness chair. that you are still under oath. DIRECT EXAMINATION BY MR. NORMAND: Q A Q Good morning, Mr. Broderick. Good morning. When we left off yesterday afternoon, you were talking (Cont.) I will remind you

about what you described as the umbrella software agreement. Do you remember that? A Yes. MR. NORMAND: BY MR. NORMAND: Q A Q A Do you recognize this document, Mr. Broderick? Yes, I do. And can you briefly describe what it is? This is the software agreement that was executed Mr. Calvin, would you put that up.

between AT&T Technologies and IBM. Q What does the number on the top right of the first page

of this document signify? A It says SOFT-00015. Each licensee, when they license a

software agreement, were assigned a specific number.

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MR. NORMAND:

Could we go to page 2 of this

And bring out section 2.01.

BY MR. NORMAND: Q The beginning of this paragraph, Mr. Broderick, says,

AT&T grants to licensee a personal, nontransferable and nonexclusive right to use in the United States each software product identified in the one or more supplements hereto. Do you see that language? A Q Yes, I do. Let's go to section 1.04 on the same page. Is this a

definition of software product that was just referred to in that grant of rights? A Q Yes. It says, software product means materials such as

computer programs, information used or interpreted by computer programs and documentation relating to the use of computer programs. A Q Yes. Let's go to section 1.02 on the same page. Is this a Do you see that language?

definition of computer program that was just used in the definition we went over? A Q Yes. It states, computer program means any instruction or

instructions, in source-code or object-code format, for controlling the operation of a CPU. Do you see that

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language? A Q Yes. Can you, when we add this all up, explain what's going What rights are being

on with the software agreement? potentially given? A

What rights are potentially at issue? If you

What it's doing is it's granting the rights.

take the supplement -- if you execute a product schedule license, it gives you the rights to source code, to source code computer programs. It's the instructions in

source-code format that you can use and you can modify -- a CPU is a computer. It tells you that you can use the source

code on a computer and develop a product. Q You referred to a product schedule license or a What is that?

supplement. A

Well, when you -- everybody who wants to get source That's our That's

code has to execute a software agreement. umbrella.

That's really our protections agreement.

where we get our protections. Q A How is it your protections? Well, it's provisions for confidentiality and what

rights of restrictions to a source code product that they license. Q What do the confidentiality restrictions mean, in your What is the point of them? It's our

experience? A

Well, we're giving them our source code.

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family jewels.

It's restricted to only people that, you It's the developers in-house, They can't distribute the source They can't tell anybody.

know, have a need to know. they have to protect that. code out to anybody else.

It also provides confidentiality for the methods and concepts in it. So they can't use our source code and then

go out and tell their friends how the source code works. It's pretty heavy duty protection of our family jewels. MR. NORMAND: BY MR. NORMAND: Q I don't believe this is yet in evidence. It should be Now will you pull up SCO 167.

on your screen, Mr. Broderick. document? A Yes.

Do you recognize this

This is a product license that IBM took out.

It's numbered number 47, and it is for a UNIX System V Release 3.0. MR. NORMAND: the top right? BY MR. NORMAND: Q A How are you familiar with this document? I worked with -- anybody who licenses a source code Can we highlight that language on

ends up with a -- first, before they get the source code, they have to execute a product license. Q A How are you personally familiar with this document? I worked with IBM in their licensing. I did not -- I

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didn't do this one.

This was before I did.

But I worked

with IBM and I knew the licenses that they had. MR. NORMAND: evidence. THE COURT: MR. ACKER: THE COURT: Any objection? No, Your Honor. It will be admitted. Your Honor, I move SCO 167 into

(Plaintiff's Exhibit 167 was received into evidence.) MR. NORMAND: Mr. Calvin, can you pull out and

show the title of this document to the jury. BY MR. NORMAND: Q So explain briefly, once again, what purpose this

document serves in relation to the software agreement that we just looked at? A This actually licenses a software product. The

software agreement is the general terms and conditions to be able to do this. It has the overall protections. Let's pull out the top right of that

MR. NORMAND:

document, Mr. Calvin, with the number. BY MR. NORMAND: Q Now is this agreement number the same as the one we

looked at, the software agreement, earlier? A Q Yes. How do those two correspond?

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A

Everything is -- everything is done -- since it's so

important to be able to keep track of who is licensed, everything is done by a licensing mechanism. like a library decimal system. It's almost

So if IBM has a software

agreement SOFT-00015, and then every time they license a new software product or a new designated CPU, new computer to use it on, they execute a new supplement and they would get a new number so we can reference -- when we talk with them about a license they have, we can reference, you know, under your software agreement X, Y, Z, we're looking at these supplement numbers, and we're both talking about the same thing. Q Now you referred also yesterday to a sublicensing This will be the last in our three issues we're

agreement.

talking about in this lecture. MR. NORMAND: BY MR. NORMAND: Q A Q A Q A Do you see that document on your screen, Mr. Broderick? Yes. What's it titled? AT&T Technology Sublicensing Agreement. How are you personally familiar with this document? I've worked with it. MR. NORMAND: if this is in evidence. It's, you know -Can you pull up SCO Exhibit 3.

Your Honor, I, frankly, don't recall If it's not, then I'll move it in.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 evidence.)

THE COURT: MR. NORMAND: THE COURT: MR. ACKER: THE COURT:

Number 3? Yes, Your Honor. Any objection? No objection. Exhibit 3 will be admitted.

(Plaintiff's Exhibit 3 was received into

BY MR. NORMAND: Q Now this language on the top right, once again, Mr.

Broderick, what is the significance of that number on the top right of this document? A Well, you lost the first letter I think from a two-hole

punch, but it's SUB-00015A, and that was the number assigned to the IBM sublicensing agreement, and each licensee would have. MR. NORMAND: Can we go to the second page of this

document and highlight 2.01(a). BY MR. NORMAND: Q This document says, AT&T grants the licensee personal, To make copies of

nontransferable and nonexclusive rights: sublicensed products. A Q Yes.

Do you see that language?

Let's go to section 1.04 on the same page.

And this

says, sublicensed product means, computer programs in object-code format based on a software product.

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Now taking those two definitions, can you explain the purpose and operation of a sublicensing agreement? A That granted the overall rights to distribute a A sublicensed product is -- I talked

sublicensed product.

yesterday about if you went to the store and you bought Microsoft Windows. That's a binary product. A binary You

product is an object code form. can just use it.

You can't change it.

So what this is granting them is rights,

if they have a license for a specific software product, to take that software product and distribute a binary. It's

the same thing as allowing somebody to distribute Microsoft Windows. Q You can't modify it at that point, just use it.

Now with all of this in mind, let's go back to an This was the

exhibit we looked at yesterday, SCO 580. Prentice-Hall letter. A Yes. MR. NORMAND: of the text. BY MR. NORMAND: Q

Do you recall discussing that?

Can you bring up the first paragraph

This was a letter, Mr. Broderick, in which Novell was

explaining that it had transferred to the Santa Cruz Operation, Inc. its existing ownership interests in UNIX System-based offerings and related products as listed in attachment A of this letter. A Yes. Do you recall this?

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MR. NORMAND: this letter.

And can we go to attachment A of

Let's bring out that full set as well as we

can, Mr. Calvin. BY MR. NORMAND: Q Mr. Broderick, what are these lists comprised of? What

are these things? A These are all the different software products -- part

of the list of the software products that we licensed under product licenses. MR. NORMAND: Can we go to the next page. The

next page, and the next page. BY MR. NORMAND: Q So all of those products, it's your understanding, had

been transferred by Novell to SCO? A Q Yeah, that's what they say. How was it that a company would go about licensing

products such as those listed here? A They would contact us, salespeople directly, and say If they already had a

they wanted to take a license.

software agreement in place, we would prepare a supplement product license for them, numbered sequentially, and send it out for execution. If they didn't have a software agreement

in place, we would send them a software agreement to execute. And then when they executed that, we would send

them the supplement.

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Q

In your experience -- you took over that business after

you transferred to Santa Cruz following the APA? A Yes. THE COURT: question. Mr. Broderick, let me ask you a

This may show my great ignorance here, but there

has been fairly constant reference to a flavor of UNIX during the course of this trial. Would it be accurate to

say that the license agreement and the software agreement together allow the licensee to create a flavor of UNIX and then the sublicense agreement allows them to market that flavored UNIX product? THE WITNESS: Well, they couldn't take a license

for a software product until they had a software agreement. And it's that product license that allows them to create a flavor. And then they could not distribute their binary of

that flavor until they had executed a sublicensing agreement. THE COURT: MR. NORMAND: BY MR. NORMAND: Q A Q Now, Mr. Broderick, did there come a time when -Kind of makes my job sound boring, doesn't it? I didn't say that. THE COURT: I was afraid you were going to be At your level, that Okay. Thank you, Your Honor.

offended that I used the term flavor.

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probably is not the phrase that you would use. THE WITNESS: BY MR. NORMAND: Q Did there come a time when the entire UNIX business We use that all the time.

transferred from Santa Cruz to the company that's now known as SCO? A Q A Q Yes. And do you recall when that happened? The official date was May of 2001. Did your responsibilities and obligations with respect

to overseeing the entire UnixWare business, contract aspects thereof, change in any way when they were transferred from Santa Cruz to SCO? A At Santa Cruz I handled primarily U.S. domestic When we transferred to SCO, I won the whole

business. world. Q

Congratulations. We're going to show you SCO Exhibit 592. I don't think

that's in evidence.

This is another category of the letters Do you recognize this document? It was similar

that Novell sends out. A

I recognize the contents of the letter.

to a lot of other letters that went out. specifically this customer. Q A

I don't remember

Why do you recognize the document at all? Well, when we were in the transition teams, we had to

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notify the licensees that Novell was selling the business. Burt Levine was assigned the job of drafting up the letter. And he did it -- when he drafted it up, he sent it

around to some of us for a second set of eyes to see if he got everything correct in it. We said yes.

Then what they do is -- a standard licensee, where there was no requirement for them to approve an assignment, they just got blanket letters. They had a form letter that

was signed by -- I believe Stu Adamson, who was our controller at the time, they did one of those things in Microsoft Word where they throw the addresses in and they sent them out. Then we had to go through the files and we had to find third-party suppliers and people we had special agreements with that required them to approve any assignment. We had

to modify the letter a little bit telling them that, okay, Novell sold the business to Santa Cruz, your agreement is being assigned to Santa Cruz, talk with them from now on, please sign this as your approval. MR. NORMAND: evidence. MR. ACKER: THE COURT: No objection. It will be admitted. Your Honor, I move SCO 592 into

(Plaintiff's Exhibit 592 was received into evidence.)

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MR. NORMAND:

Mike, can you pull up the first

BY MR. NORMAND: Q This states in the letter from Novell, as you may have

heard, Novell has transferred to The Santa Cruz Operation, Inc. Novell's existing ownership interest in UNIX System-based offerings and related products, collectively transferred products. A Q Yes. From your work, following the transition, do you know, Do you see that language?

approximately, how many such letters Novell sent out to these licensees and partners? A My guess is about 3,000. I've got copies for all of

them and there were boxes filled in my office for a long time. MR. NORMAND: BY MR. NORMAND: Q A Who signed this letter, Mr. Broderick? That's Burt Levine. He's a lawyer at Novell. He's the Can we pull up the signature, Mike.

sole lawyer of the UNIX group. Q A

He came from USL with us.

Now where was Mr. Levine located? In our offices in New Jersey. The UNIX developers and

finance people and contracts people that were with Novell were all located in Florham Park, New Jersey, and Burt was located there with us.

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Q

From your work following the transition from Novell to

Santa Cruz, are you aware of any letter saying that any customers should deal with Novell concerning copyright issues? A Q No. Are you aware of any letter saying Novell retained any

copyrights? A Q No. Let's do one more of these, Mr. Broderick. Do you recognize that document? Turn to SCO

Exhibit 22. A Q

I've seen this one, yes. I take it you recognize it on the same basis that you

have recognized these earlier letters? A Yes. MR. NORMAND: Honor. MR. ACKER: THE COURT: No objection. It will be admitted. I move SCO 22 into evidence, Your

(Plaintiff's Exhibit 22 was received into evidence.) MR. NORMAND: Now, Mike, let's pull up the top

left to show who this letter is to. BY MR. NORMAND: Q Did you have occasion in your work to deal with

Microsoft Corporation, Mr. Broderick?

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A

Not a lot, but I have had some dealings with them. MR. NORMAND: Let's pull up the first paragraph of

the letter, Mike. BY MR. NORMAND: Q So this is another one of the letters with the

following language, as you may know, Novell transferred to The Santa Cruz Operation, Inc. its existing ownership interests in UNIX System-based offerings and related products. A Q Yes. In the next paragraph, this letter also contains, in Do you see that language?

the second sentence, similar language to what we saw earlier, it makes immeasurably more business sense for SCO, as the owner of the software in which the components may be included, to handle directly with Microsoft any matters that may become relevant under the subject agreement. that language? A Q Yes. How does that language comport with your understanding Do you see

of Santa Cruz's responsibilities and rights following the transition? A Well, Santa Cruz bought the business of technology. Microsoft -- it was a product

They had all the contracts.

that Microsoft had that Santa Cruz had used in the UNIX operating system. And by buying the UNIX operating system,

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they got all the contracts for all the third-party suppliers, and this is just one of those letter to a third-party supplier. Q Let's look at the next page and the signature. MR. NORMAND: BY MR. NORMAND: Q A Who was Michael DeFazio? He was a Novell senior vice president in charge of the He was located with us in New Jersey. Can you bring that up, Mike.

UNIX business. Q

Now following this transition and during the course of

your work at Santa Cruz and SCO, did you have any understanding of what rights Novell had retained with respect to the APA? MR. ACKER: Calls for speculation, Your Honor.

Also, there is no foundation. BY MR. NORMAND: Q Did you have in your month-to-month work while at Santa

Cruz and SCO occasion to deal with Novell with respect to any rights it had retained under the APA? A Q A Yes, I did. How so? Well, when we had the transition meetings, we were They identified people who were And

still all Novell employees.

going to Santa Cruz and people who were staying Novell.

they pulled up contracts binding these people together, and

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we went through portions of the asset purchase agreement because it had some ongoing requirements. Q A When you say they pulled? Novell management pulled us together. And part of

those ongoing requirements, they showed us sections of the asset purchase agreement. One of them was section 4.16

which talks about Novell's retaining some binary royalty rights. As part of the purchase price, you know, they got

stock and they got these ongoing royalties for the older UNIX System V products. And in the asset purchase agreement, there were some restrictions that, as employees who were going to SCO, we had to follow and the employees staying with Novell had to make sure we followed them. One of them was we couldn't do It was money in

anything to jeopardize that royalty stream. the bank to them.

We weren't allowed to touch it.

We talked about it, and what we couldn't do was, once we became Santa Cruz Operation, we couldn't go to the licensee and say, look, you're paying $100 per copy on a royalty for this product, take a license with us, we'll charge you $50 a copy, and then beat Novell out of their royalty stream. We weren't allowed to do that. There were

restrictions on our entering into new licenses. Q Mr. Broderick, going back to what we started today, in

your experience and your view, what was the source of the

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royalty streams? A

Where did those come from? When you

They came from the product schedules.

license -- when you license a product, the product schedule has the royalty listing, you know, what you had to pay. MR. NORMAND: of the APA. Now, Mike, let's go to Section 4.16

Bring out (a).

BY MR. NORMAND: Q Now, Mr. Broderick -- I'm sure the jury appreciates our

patience as we go through this -- this is the language in which the APA refers to all, quote, SVRX licenses, as listed in detail under item VI of schedule 1.1(a) hereof. see that language? A Yes, I do. MR. NORMAND: and item VI. BY MR. NORMAND: Q Mr. Broderick, have you had occasion to review item VI Mike, can you go to schedule 1.1(a) Do you

of schedule 1.1(a)? A Oh, yes.

BY MR. NORMAND: Q So the previous page, at the bottom -MR. NORMAND: Mike, the top. Let's first highlight for the jury,

This is schedule 1.1(a), and highlight

number VI at the bottom. //

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BY MR. NORMAND: Q It says, all contracts relating to the SVRX licenses Now in your experience, Mr. Broderick, what What are those

listed below.

are actually listed below in item VI? things? A

These are the source code products that we had product

schedules for and we issued licenses for. Q Now going back to section 4.16, following that

transition meeting and based on your experience at Santa Cruz and then SCO, what was your understanding as to what SVRX licenses referred to? A SVRX licenses referred to the source code licenses for

the products for -- all of the products that we licensed, excluding UnixWare. Q And let's look at section 4.16(b). This is the

language that says, buyer shall not, and shall not have the authority to amend, modify or waive any right under or assign any SVRX license without by the prior written consent from seller. In addition, at seller's sole discretion and

direction, buyer shall amend, supplement, modify or waive any rights under, or shall assign any rights to, any SVRX license to the extent so directed in any manner or respect by seller. A Q Do you see that language?

Yes, sir. Now in the course of your work, did you develop an

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understanding of what rights Novell had with respect to waiving or modifying SVRX licenses? A Q Sure. I actually worked with Novell on some of those.

What was the understanding you had as to the scope of

those rights? A They had rights to tell us to modify or have approval

for modifications of changes to the licenses, the product schedules. Q Did you have an understanding as to why they had the

right to do that? A Because that's where the royalties came into play.

They were continuing to get the royalty stream as part of the purchase price, so they had the right to manage that royalty stream. Q Now at the start of the day we were talking about what Do you remember

we call the umbrella software agreement. that? A Q Yes.

In your view and your experience, if Novell had the

right to waive or modify SCO's rights under the software agreement, what would be the consequences? A Q A It would destroy our business. Why? Because of the provisions -- that's where all our

protections lie, the provisions of confidentiality, the

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rights on -- limited rights for them not to just use the source code to modify it, not to distribute the source code. If they could waive those rights, Santa Cruz bought the business from Novell, Novell could just turn around the next day and destroy the business. Q Now, Mr. Broderick, I want to show you SCO Exhibit 213. It's not yet in Do you recognize this

It's going to come up on your screen. evidence. document? A Q A Q Yes, I do. It's from Novell; is that right? Yes. This is a letter to you.

And did you have occasion to receive this letter during

your work at Santa Cruz? A Yes. MR. NORMAND: evidence. MR. ACKER: THE COURT: No objection. It will be admitted. Your Honor, I move SCO 213 into

(Plaintiff's Exhibit 213 was received into evidence.) BY MR. NORMAND: Q Now before we start to highlight this letter for the

jury, could you briefly describe the background with respect to this company Cray that gave rise to this correspondence?

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A

Sure.

Cray Research had a license going back to UNIX They licensed UNIX. And Cray built

System Laboratories.

super computers, those multimillion dollar computers mostly used by the government. computers. They were very high powered

They sold for sold multimillions of dollars.

They had a special license with us where they not only had the right to distribute the binaries with their products, but they were given a special right to deliver source code with that computer. Q And did there come to be some dispute or discussion

with Cray about its rights? A SGI. me. No. Actually the discussions slash dispute came with They contacted

Silicon Graphics bought Cray Research.

And Silicon Graphics had been given a binary royalty

buyout by Novell, so they didn't have to pay royalties anymore. They had paid a lump sum up front. When they

bought Cray Research, they said we're putting Cray underneath our buyout provisions. but no. Q A And I had said, nice try,

And we discussed this back and forth for a while.

And what was the result of the discussions? The discussions weren't going anywhere. So I went to

my boss and I said, you know, we get five percent of these binary royalties. talking with them. I've been spending about that much This is a binary royalty deal. Why

don't we turn this over to Novell and say, look -- under the

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APA, we have to take reasonable efforts to protect and collect their royalties. I have expended that. So we went

to Novell and said, you know, here's the situation, you deal with it as it applies to the binary royalties. You can't

touch any of the source code fees, rights or anything else, but you do the binary stuff, I'm done. MR. NORMAND: at the bottom. BY MR. NORMAND: Q Do you have an understanding, Mr. Broderick, as to why Mike, let's pull up the signatures

this is signed by two people? A It was signed by -- it was signed by Steve Sabbath and Ryan Richards sent the letter to Steve

Ryan Richards.

Sabbath, who was our general counsel at Santa Cruz, sign it saying, yep, we agree to this. MR. NORMAND: BY MR. NORMAND: Q This language says, by signature below, SCO authorizes Mike, pull up the middle paragraph.

Novell to negotiate and conclude with Cray the issue of Craig's intention to operate under the SGI agreements for all SVRX royalty-generating binary shipments. that language? A Q Yes. This is an instance in which SCO is authorizing Novell Do you see

to undertake to deal with SGI with respect to Cray; is that

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right? A Q Yes. Now, Mr. Broderick, when you were part of the UNIX

group at USL and Novell, did those companies amend and modify rights under product schedule licenses? A Q A Certainly, often. How so? There were hundreds of them. Most of them had to do

with -Q A When you say hundreds of them, what do you mean? Hundreds of license agreements. Any time we modified a

product schedule -- generally a product schedule that we did, it had to be in writing. The software agreement says

any modifications to product schedules or anything, we both have to sign it. Q So what they would do --

Why did those companies have occasion to amend and

modify the product schedule licenses with frequency? A It generally had to do with royalties they would pay.

A lot of the companies would come and say, I'm only using a portion of the UNIX I have embedded in my product. need these sections, so I don't want to pay the full royalty. Let's negotiate a lower royalty. We would do a I only

letter agreement modifying the product license so they would pay the lower royalty. Q When you were at USL and Novell, did those companies

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sometimes waive rights under product schedule licenses to cut a licensee a break, for example? A By waive rights, you mean -- they do letter agreements

waiving -- if somebody licensed a source code product, there was a one-time, up-front fee for the source code. And

depending on the source code product, if it was an operating system, it would be anywhere from $100,000, to UnixWare, which is $375,000. If they were a current licensee and we

wanted them to move to the next release that we were coming out with, we would do a letter agreement and offer them a lower one-time fee for the source code. So that was

essentially a waiver of something under a license. Q Did all those activities relate to and surround the

product schedule licenses? A Q Absolutely. Now after the APA, did Novell direct SCO and Santa Cruz

to amend or modify the product schedule licenses from year to year? A Q A Yes, they did. How so? In each product schedule there is a provision for the What they could do is -- when

royalties to be increased.

you sign a license, you have to -- you agree to pay royalties. And there are a lot of people that have taken --

there are people that are still shipping a product based on

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UNIX System V Release 3.2.

That was licensed back in the

1980s, which they continue to develop and they continue to ship. So in the product schedule there is a provision that

we can increase their royalties based on an increase in the consumer price index, and we can increase it annually. After we went to Santa Cruz, the finance person at Novell directed me each year to notify the licensees that we were increasing the royalties by this consumer price index. Q Was it your understanding, after this set of transition

meetings concerning the APA, that Novell had sought to preserve for itself the same rights of waiver and modification that it had before the APA was executed? A Q I'm sorry. Yes. Could you repeat that?

The question is, was it your understanding,

following the transition meetings, that Novell wanted to retain that same waiver of rights, same rights to modify product schedule licenses after the APA that it had before the APA? A Q A Q As it related to the binary royalties. Was that your understanding? Yes. Now, until 2003, to your knowledge did Novell ever

direct Santa Cruz or SCO to waive its rights under or to amend or to modify any software agreement? A No, but that's not where the royalties are generated,

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so that wouldn't be a right they retained. Q A Q To your understanding? To my understanding. Now did there come a time you learned that Novell had

directed SCO to waive its claim that IBM had breached IBM's software agreement? A Q A Q A I have heard that. What was your reaction? They're nuts. What was the basis for that reaction? They had no rights to do that. They had a right to

protect their royalty binary stream, not to waive -- if they had the rights to waive provisions under the software agreement, that would have put us out of business, destroy the entire value of our company. Q Now did there come a time when you learned that Novell

was claiming that under the APA Santa Cruz had obtained only a license? A Q A Q A I heard that. What was your reaction to that? They're nuts. Why? Well, first of all, I have been in contracts for almost If I license something to somebody, I call it a If I sell something to somebody, I call it a

20 years. license.

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purchase agreement or a sale. Q A Please continue. The agreement between Santa Cruz and Novell is an asset It's a purchase agreement. Also,

purchase agreement.

throughout the agreement, Novell was referred to as the seller, not the licensor. buyer, not the licensee. Santa Cruz is referred to as the And I've never done a license

where I've transferred all right, title and interest in an asset. Q Now, Mr. Broderick, as of the fall of 1995 -- it may

take a couple minutes to explain this, but as of the fall of 1995, totally apart from the APA, did Santa Cruz already have a UNIX license? A Yes, they did. MR. NORMAND: BY MR. NORMAND: Q A Q A Do you recognize this document, Mr. Broderick? Yes. On what basis do you recognize it? It's a letter to Santa Cruz Operation from O.L. Wilson. Mike, can we pull of SCO 706.

He used to be in charge of the licensing group at AT&T. Q A seen. MR. NORMAND: Your Honor, I move SCO 706 into What is your personal knowledge of this document? It's among the documents that I worked with and have

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evidence. MR. ACKER: sufficient foundation. Novell and/or SCO. Your Honor, I don't think that's a This document predates his work at

He doesn't seem to be able to identify

where and when he used it or saw it. BY MR. NORMAND: Q Mr. Broderick, in your personal experience, did you

have occasion to review and consider the terms of Santa Cruz's license during your work at Novell, Santa Cruz and SCO? A Yeah. I went through the licenses when we were told we

were going to be working for them to find out what they were doing and who they were. Q A Did you do that as part of your job responsibilities? I did that out of curiosity and trying to stay

employed. THE COURT: Would your review have included this

agreement that you would have reviewed? THE WITNESS: THE COURT: of this agreement? THE WITNESS: documents, licenses. this document. I pulled out all of Santa Cruz's I don't remember specifically seeing I'm sorry? Would your review have included review

But I looked at everything Santa Cruz had. Same objection, Your Honor.

MR. ACKER:

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 evidence.) evidence.

MR. NORMAND: document, Mr. Calvin. BY MR. NORMAND: Q A Q A Q

Could we go to the next page of the The next page.

Do you recognize this document, Mr. Broderick? Yes, I do. On what basis do you recognize it? It's Santa Cruz's software agreement. Is this the agreement you were referring to earlier

that you referred to and reviewed in the course of your job responsibilities? A Q A Yes, I did. Do you now recall reviewing this document? Yes. MR. NORMAND: Your Honor, I move SCO 706 into

THE COURT: MR. ACKER: THE COURT:

Mr. Acker. No objection, Your Honor. It will be admitted.

(Plaintiff's Exhibit 706 was received into

MR. NORMAND:

Now, Mr. Calvin, can we pull up the

first three paragraphs, including the title. BY MR. NORMAND: Q This document is titled AT&T Information Systems, Inc. The first paragraph identifies the

Software Agreement.

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Santa Cruz Operation, Inc. Broderick? A Q Yes, I do.

Do you see that reference, Mr.

Now what would be the point -- let me start this way. Summarizing what we started the day with, what is your

understanding of what -- as of 1995, what is your understanding of what the scope of Santa Cruz's rights were under this license and the corresponding sublicensing or product schedules? A Under this license -- under this license, it's like

every other license -Q A Q You say license? Well, I mean under this agreement. I should be clearer. Sorry.

Do you know whether Santa Cruz

executed a product schedule license under this operating agreement? A Q Yes, they did. Taking these together, what was your understanding of

what Santa Cruz's rights were as of 1995 under the software agreement and license? A Well, under the software agreement, they had rights to

acquire source code products. Q A Q Do you know if they did? Yes, they did. Do you know if they built a UNIX business around the

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software agreement and license that they took? A Q A Yes, they did. How do you know that? I know that because they were a licensee and we knew They paid royalties. And

what our licensees were doing.

they actually distributed a binary.

They were the only

company I knew of -- the reason I got to know them is because when we were talking about the business, it was mostly OEM computer, original computer manufacturers that license our software and they put the UNIX on their computer. Santa Cruz had a different business model, which

is why I got to know them when I was working at USL and Novell. Santa Cruz wasn't a computer manufacturer. They

took the UNIX operating system and they created a UNIX binary similar to Microsoft Windows, but it was a UNIX operating system. Q A Is that a flavor? That would be a flavor. And they distributed that. They would sell it to

They distributed it to distributors.

companies like Dell or Compaq, who had personal computers, and instead of putting Microsoft Windows on the computer, they put Santa Cruz's UNIX on the computer. Q Now in the fall of 1995, based on your experience, if

Santa Cruz had wanted to license the most recent version of UNIX, if it had wanted to license UnixWare, all it wanted

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was a license to UnixWare, about how much would it have paid for that kind of license? A The standard unit for a source license was $375,000,

but current licensees that licensed UnixWare were generally given a break in the price. You know, it was the effort to

move them to the next release and keep them current with what we were doing. than the $375,000. Q Now, Mr. Broderick, I want to show you a slide that So they probably would have paid less

Novell used in its opening argument. THE COURT: Mr. Normand, before you do. This

agreement is with AT&T.

Was this agreement, to your

knowledge, still in effect even though AT&T had sold the UNIX business to Novell? THE WITNESS: Yes, it was still in effect. All

the agreements just transferred through.

The agreements

were, essentially -- the agreements were, essentially, a perpetual for source code. The reason that was was the

companies that license the source code, the large IBM, Hewlett-Packard, they expended a lot of money and a lot of resources to create their flavor, and they wouldn't -- they wouldn't sign an agreement that said, okay, after you spend all this time and all this effort, we're going to cancel your agreement. //

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BY MR. NORMAND: Q Were there circumstances in which these UNIX companies

did retain the right to terminate a licensee's rights under the software agreement? A The licensee could terminate any time they wanted. We

could terminate the license if they breached a provision of the agreement. Q A I see. Absolutely, if -- you know, as I said before, this was If

our family jewels we were letting these people have.

they were doing something wrong with the source code, we were going to shut them down. Q Okay. MR. NORMAND: BY MR. NORMAND: Q I had asked Mike to put up the slide that Novell had Thank you, Your Honor.

used in its opening argument, and I wanted to ask you some questions about this slide, Mr. Broderick. A Q Sure. Do you see the top half of the exhibit reflects the

sale of the UNIX business from AT&T to USL and then from USL to Novell? A Q Yes. Do you see the bottom half of the slide lists

Hewlett-Packard, HP, Sun and IBM?

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A Q

Yes. In your experience, what was the nature of HP's, Sun's

and IBM's involvement with UNIX? A Q They were a licensee. Now let's start with HP. Did you have any involvement

in the licensing of UNIX to HP? A Q A Q Yes. When did that occur? Through my time at Novell and Santa Cruz. Did HP create its own flavor of UNIX called, as

indicated here, HP-UX? A Yes, they did. MR. NORMAND: 1.1, please. Mike, can you bring back up schedule

Let's put up the first paragraph.

BY MR. NORMAND: Q Now, Mr. Broderick, when HP licensed UNIX, did Novell

or its predecessor also transfer to HP all copies of UNIX and UnixWare? A No, they did not. MR. NORMAND: BY MR. NORMAND: Q When HP licensed UNIX from Novell, did Novell transfer Let's bring the slide back up, Mike.

all of its employees in the UNIX licensing group to HP? A Q No, they did not. So you remained at Novell along with the rest of the

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employees in the UNIX licensing group after that HP license? A Q Yes, I did. Let's move on to IBM. Did IBM license UNIX from Novell

or its predecessors? A Q A Q Yes. That's the agreement we started the day with, right? Yes. Now when IBM licensed UNIX, did the parties execute a

license purchase agreement? A Q No. They executed a license.

When IBM licensed UNIX from Novell or its predecessors,

were the UNIX engineers instructed to go into the UNIX source code and add copyright notices? A Q No, they were not. Let's move on to Sun, also indicated in the slide.

When Novell licensed UNIX to Sun, did Novell or its predecessor license back the UNIX technology so it could use that technology in its own products? A Q No, it did not. Did Novell send out letters to its customers and

partners informing them that Novell had transferred its existing ownership interest in UNIX to Sun? A Q No. So returning to the slide that Novell created for the

jury, in your view, where does SCO fit into the diagram?

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A Q A

On the same level, directly to the right of Novell. Why do you say that? Because Santa Cruz bought their business, just like

Novell bought the business. Q Now, Mr. Broderick, with all of this in mind -- we're

getting close here -- let me return to your participation in that transition process in 1995. As part of that process,

did you separate materials that Novell was keeping from the materials that Santa Cruz would take possession of? A Q A Yes, I did. Why did you do that? Because Novell was -- Novell was retaining certain

products that were part of the -- the Novell UNIX group had not only the UNIX operating system, but they had some other products and they had some agreements related to those products that were not going to Santa Cruz. So we had to go

through all of the legal and financial files, intellectual property files and pull out the files that were related to products that are -- business that was not going to Santa Cruz and was staying with Novell. Q Did you receive any direction from anyone in this

regard? A Q A Yes, we were told. Who told you? Novell management. At the time we were all Novell

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employees.

We had just been designated you're going to So we went into the Obviously all So

Santa Cruz, you're staying with Novell.

file room and we were told what to look for.

the NetWare agreements and files have to be pulled out. what we did is we put a couple of tables in the center of the file room, and anything related to NetWare was put on the table.

Then we looked -- there was the tuxedo product and some kind of data management product, and Novell was retaining that. That was not getting sold to Santa Cruz. So any

files relating to this tuxedo product were pulled out. And then also there was a product called documented workbench. It is an old product from AT&T, USL, but Novell So any files we

also was not selling that to Santa Cruz.

found relating to the documented workbench were pulled out. What we did is we tried to isolate all the files that Novell needed to retain. Then the resulting files were So we went through all

going to be Santa Cruz's files.

these files and pulled them out and said, okay, Novell, here's, you know, what you asked for, these are all the files you need. Q They said, yes. We said, okay, take them.

Now, Mr. Broderick, as part of that process, which

company took possession of the UNIX and UnixWare copyright registration certificates that were in New Jersey? A I'm assuming Santa Cruz because we have them now.

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Q A Q A

How do you know we have them now? They are in Lindon. Lindon? Utah. MR. NORMAND: THE COURT: May I approach, Your Honor? You may, and you don't need to ask,

Mr. Normand. MR. NORMAND: Mr. Broderick's sake. BY MR. NORMAND: Q A Do you recognize those materials, Mr. Broderick? Yes. I saw these when we were -- there was a point in Thank you, Your Honor. I ask for

time after Caldera bought us that we shipped also the legal files to Lindon, and on one of my trips out to Lindon, we were organizing the files and came across this and we made a decision on where to file it. Q A Q What do you understand those materials to be? These are copyright registrations related to UNIX. What do the green tabs on the side of those say, Mr. Are there exhibit numbers?

Broderick? A Q A Q

The first one here says Exhibit 487. What does the second one say? Exhibit 488. Now before we get into those in a little more detail, I

want to show you and the jury, Mr. Broderick, a schedule to

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the APA.

Let's start with the seller disclosure schedule. MR. NORMAND: Go to page 1 of that, Mike. The

page before that, I believe. THE COURT: Mr. Normand, Mr. Broderick asked if he

could stretch for just a second. MR. NORMAND: THE WITNESS: BY MR. NORMAND: Q We're going to show you the seller disclosure schedule This appears at the end of the APA. And the Of course. I'm getting old.

in the APA.

second page of the seller disclosure schedule refers to -let's start at section 2.10, bring all that out. refers to intellectual property. This

There is a reference at

the bottom, attachment E to this schedule contains a listing of seller's copyright registrations covering products related to the business. A Q APA. THE COURT: Just one second, Mr. Normand. The Yes. So let's go to the first page of attachment E to the Do you see that?

jury should be seeing this, correct? MR. NORMAND: THE COURT: MR. NORMAND: THE COURT: That's right, Your Honor. He's doing the APA. I'm sorry. You need to back up because they

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didn't see that last one. MR. NORMAND: disclosure schedule. Mike, let's go back to the seller Let's highlight that top language of

the first page of the seller disclosure schedule so the jurors can see what it says. to the APA. This is in the APA, schedule

Let's go to the second page of this schedule. See the reference to

Highlight that section 2.10 language.

intellectual property, and there is a reference at the bottom, attachment E to this schedule contains a listing of seller's copyright registrations covering products related to the business. So now let's, in turn, go to attachment E, page 1. Bring up the title. Products of Business. Attachment titled Selling Copyrights in Let's go to page 8. Let's highlight

those bottom three references. BY MR. NORMAND: Q Mr. Broderick, do you have an understanding of what,

with respect to this first reference, UNIX Operating System Edition 6 is? A Yes. MR. ACKER: Object. He needs to read the whole

line, and instruction manual. MR. NORMAND: I'm asking him if he understands

what the first part of the line is. //

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BY MR. NORMAND: Q Is the instruction manual separate from the UNIX

Operating System Edition 6? A The instruction manual tells you how to use the

Operating System Edition 6. Q Now we're going to put on your screen, Mr. Broderick,

what's been marked as SCO Exhibit 486. THE COURT: MR. NORMAND: THE COURT: MR. NORMAND: sure 487 and 488 are in. THE COURT: admitted yet. MR. NORMAND: BY MR. NORMAND: Q A Q Do you recognize Exhibit 486, Mr. Broderick? It's a copyright registration. Let's go to 487. Let's go to page 3 of 487. Now can Correct, Your Honor. 485, 486, 487, 488 have not been 486 or 487? 486, Your Honor. This the jury should not see. That's correct. In fact, I'm not

you tell, Mr. Broderick, if the exhibit on the screen corresponds to 487 in your book? A Q It looks like it corresponds. Are you familiar with these copyright registration

certificates? A I've seen them, yes.

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Q A

On what basis have you seen them? When we were filing out in Lindon, Utah, I believe I When we were doing the filing out in

thumbed through them.

Lindon, Utah, I was doing that filing with a woman named Joanie Bingham, B-i-n-g-h-a-m, and we were deciding how to file. We were doing the customers and the licensees

alphabetically, and I told her she should set up a separate area for those things, like the copyright registrations. looked through the binders at that time and saw what they were and said, put them in a file called copyrights. Q Have you maintained ultimate control of these materials I

since that time? A Q A They did in Lindon, yes. And did they do so at your direction? I told her to file them and not throw them out. That's

my direction. Q A Apparently she did that. She did a good job. MR. NORMAND: evidence. MR. ACKER: THE COURT: No objection, Your Honor. It will be admitted. She didn't throw them out. Your Honor, I move SCO 487 into

(Plaintiff's Exhibit 487 was received into evidence.) //

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MR. NORMAND:

Now, Mike, can you highlight the

language in number one were it says title of this work. BY MR. NORMAND: Q It says UNIX Operating System Edition 32V and Do you see that language, Mr.

Instruction Manual. Broderick? A Yes.

MR. NORMAND: the top right.

Bring that down, Mike, and pull up

Actually, you can get rid of the operating Can we pull that, Mike, up side by side

system reference.

or top to bottom with the corresponding number in attachment E of the APA. BY MR. NORMAND: Q Now, Mr. Broderick, what is the number on the top right Can you see

of the certificate of copyright registration? that, the registration number? A Q TXu 516 704.

Do you see a corresponding number in the attachment to

the seller disclosure schedule in the APA? A Yes, I do. Same number. Let's bring up for Mr. Broderick SCO

MR. NORMAND: Exhibit 488.

Let's go to page 3. 488 has not yet been admitted. Correct, Your Honor.

THE COURT: MR. NORMAND:

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BY MR. NORMAND: Q Can you see, Mr. Broderick, the document on your

screen, the right side of your screen -MR. NORMAND: BY MR. NORMAND: Q The question is going to be whether the document that Let's do SCO 488, Mike.

comes up on your screen corresponds to 488 in the book that's in front of you. MR. NORMAND: THE WITNESS: MR. NORMAND: evidence. MR. ACKER: THE COURT: No objection. It will be admitted. Let's go to page 3. The two documents correspond. Your Honor, I move SCO 488 into

(Plaintiff's Exhibit 488 was received into evidence.) MR. NORMAND: comparison. THE COURT: microphone. MR. SINGER: BY MR. NORMAND: Q Do you see the number on the copyright registration, I'm sorry. Mr. Singer, you can be heard in that Mike, can you do the same

Mr. Broderick, top right? A Yes, I do.

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Q

Can you see if that corresponds to the number in the

attachment to the seller disclosure schedule in the APA? A They are the same. MR. NORMAND: Actually take them out. registration. and 2. BY MR. NORMAND: Q Do you see, Mr. Broderick, the reference in 2, in sort Let's bring those down, Mike. We'll just look at page 3 of the

Highlight the first half of the language 1

of the middle of that highlighted where it says nature of authorship? A Q A Q Yes. What does it say? Computer program. Is it your understanding that UNIX Operating System

Edition 7 is a computer program? A Oh, yes. MR. NORMAND: Just a moment, Your Honor.

Your Honor, we would like to move into evidence as well the other copyright registration certificates, and I don't have the list handy. or with some other witness. Court. THE COURT: MR. NORMAND: All right. Thank you, Mr. Broderick. No Maybe I can do that on redirect Just to flag that issue for the

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further questions. THE COURT: Mr. Acker. THE WITNESS: MR. NORMAND: THE COURT: Acker? MR. ACKER: there. CROSS-EXAMINATION BY MR. ACKER: Q I'll give you these, Mr. Broderick, just in case. Good afternoon. A Q A Q A Q A Good afternoon. How are you? Pretty good. Where do you currently work, sir? The SCO Group. And do you have any equity interest in the company? I do. I have a little over 6,000 shares of stock that We'll put them on that table over Do you want your books back? I'll take them. Will you be using those books, Mr. Mr. Normand, thank you.

I purchased through the stock purchase plan and I have a number of options that are -- I think because we're in Chapter 11 are frozen. Q A How many options do you have, sir? About 30,000.

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Q

So you have shares of stock that if SCO's stock price

rises, you will gain financially, correct? A Q That's true. And you also have shares -- 30,000 shares of stock. Do

you know what the strike price is for those shares of stock? A Anywhere from 24 cents. Better than 50 percent of them

are around nine, $10. Q So if those shares with a strike -- options of strike

price of 24 cents, if SCO's stock price was to go up to $10, you would make $10 per option, correct? A That's true, but on half of them I would make about 30

cents. Q So if SCO's stock price were to rise, you would gain

financially, correct? A Q Sure. Now you were not involved in the negotiation of the

asset purchase agreement; is that right? A Q That's true. And you were not present at the Novell board meetings

in September of 1995 when the asset purchase agreement was approved, correct? A Q That's true. And you had no involvement with any of the amendments

to the asset purchase agreement, correct? A That's true.

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Q A Q

Now you're a contract guy, right? I'm a contracts guy. Let me ask you a little bit about contracts. You would

agree with me, wouldn't you, that a written contract provides a written record of what the parties agreed to? A Q That's the intent of a contract, yes. And in a written contract, you want to be as clear as

possible in case there are misinterpretations in the future about what the parties intended, correct? A Q That's the intent of the contract, yes. And the reason for putting it in writing is so there is

no misinterpretation years down the road about what the parties agreed to, right? A Q That's correct. You want a written record so people in the future

cannot say the contract said one thing when it actually said another, correct? A Q That's the intent, yes. You also want a contract so people don't forgot what

they agreed to years after it's put in writing, right? A Correct. MR. ACKER: BY MR. ACKER: Q We looked at this when Mr. Normand was taking you This is a software license Could we bring up SCO 04, please.

through your direct examination.

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agreement between AT&T and IBM, right? A Q Correct. And this is one of the contracts that was first

purchased by Novell and eventually went to Santa Cruz; is that right? A Q Yes. And you actually administered, at times, this contract,

correct? A Q Correct. And the reason that the words and the clauses are put

in the contract is so that both parties know what their rights and obligations are, right? A Q That's the intent, yes. The reason that the words are put in the contract is so

that years after the contract was executed, you can pick up the written document, you can look at it, you can read it, and you can know what the rights and the obligations are of each side, correct? A Q Correct. And when you enter into these sorts of agreements with

a party, you expect that party to comply with and abide by the written terms of the agreement, right? A Q Yes. And you don't expect somebody on the other side of a

contract to, years later, just tell you orally, well,

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despite what the words in the contract say, that is not what we meant and therefore we're not going to abide by the written contract, right? A Q A Q A Q That's always been my intent. That's your practice, right? Yes. That's the way it works, right? Yes. So, for instance, if we take a look at the third page

of this agreement, paragraph 2.05, this is a license agreement, and this 2.05 excludes certain rights, in other words, it says, no right is granted by this agreement for the use of software products directly for others, or for any use of software products by others, right? A Q Yes. In essence, back when this agreement was executed years

ago, AT&T was telling IBM you can't give these rights to other people, they are just for you, right? A Q A Q Yes. And they put it in writing, right? Yes. They put it in writing so that 15 or 2