SCO Grp v. Novell Inc

Filing 863

NOTICE OF FILING OF OFFICIAL TRANSCRIPT re March 18, 2010-Jury Trial-Volume IX before Judge Stewart re: 567 Notice of Appeal,. Court Reporter/Transcriber Ed Young, Laura Robinson, Patti Walker, 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 (jmr). Modified by removing restricted text on 7/19/2010 (rks).

SCO Grp v. Novell Inc

Doc. 863 Att. 2

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THE COURT: MR. BRENNAN:

Are we ready? I'm going to announce that I

finished my questioning. THE COURT: Okay. Good.

Will we still possibly put Mr. Stone on today,

MR. SINGER: left or I would. the depos. MR. ACKER:

Well, unfortunately, Mr. Stone has

So it looks like we're going to be doing

He's available at 8:30.

We'll start

with him first thing in the morning. THE COURT: Thank you, Mr. Acker.

Ms. Malley, if you would please bring the jury in. MR. SINGER: We're doing a little bit of

scrambling here because we thought Mr. Brennan had another 20 minutes of examination, so we're trying to -- one way or the other, we'll make sure we're not wasting any court time. MR. BRENNAN: told them I was done. THE COURT: over their faces. THE WITNESS: THE COURT: Me in particular. I hope someone told Dr. Botosan this. I can tell there is pain written all I deeply disappointed them when I

(Jury present)

Dockets.Justia.com

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MR. BRENNAN:

Your Honor, I have no further

questions of Dr. Botosan and will turn the witness to Mr. Hatch. THE COURT: MR. HATCH: THE COURT: Thank you, Mr. Brennan. May I, Your Honor? Yes. REDIRECT EXAMINATION BY MR. HATCH: Q A Q Good afternoon. Good afternoon. I had to check. Mr. Brennan talked to you about a lot. to talk to you about a couple of things. The 2004 court decision that he talked to you about, do you recall what kind of a motion was at issue in that case? A Q A Q he? A Q I don't recall him mentioning that. This 2007 decision that he talked about, do you recall It was the motion to dismiss. Yes. Do you know what the ultimate result of that was? I am only going

That it was found in favor of SCO. In favor of SCO. Mr. Brennan didn't tell you that, did

what kind of a motion that was? A Q That was a summary judgment motion. And do you recall what the ultimate outcome of that was

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after it went to the court of appeals? A Q A Q A Q A Q It was overturned. In favor of who? In favor of SCO. Did Mr. Brennan tell you that? I don't recall. I believe it was the judge that told you that? Yeah. I think I asked about it actually.

And ultimately your understanding is that because of

the decisions of the court in both those decisions in favor of SCO, that's why we're here today, isn't it? A Q Correct. Now Mr. Brennan also -- he went through in length that A document that he put

you had relied on Deutsche Bank.

before you was Novell Exhibit R-21. MR. HATCH: BY MR. HATCH: Q Do you recall -- he went through several risk factors Mr. Calvin, could you put that up.

with you; is that right? A Q That's correct. And ultimately did you take those into consideration in

your analysis? A For the risk factors that apply to the product markets, It's incorporated into the forecasts and it's also I can just talk loud.

I did.

incorporated -- did that go off?

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It was also incorporated into Dr. Pisano's analysis. So those risk factors that are specific to the product market are relevant and are incorporated into the analysis. The risk factors that he was referring to were risk factors related to SCO as the company, it's their company risk factors that don't have to do with the product markets. And

that would be relevant if we were concerned about what SCO's stock was selling for. But that is not the analysis I did.

The analysis I did was how much lost profit we would get from the SCOsource. THE COURT: BY MR. HATCH: Q A Q I think everybody heard us. Okay. But even the way Deutsche Bank was looking at it -- and We won't repeat all that. Sandy, her microphone is not working.

they listed all the risk factors, right? A Q Yes, they did. I want you to look at Exhibit R-21 that Mr. Brennan On that first page under buy, does it

showed to you.

indicate what the price was at the time of this report? A Q A Q $16? It does. It says the price at 13 October 2003, $16.01.

The date of this report is what date? October 14, 2003. So the price the day before this report came out is

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A Q A Q

Correct. I take it the report lists all the risks, all the pros? Correct. Given all that, what did Deutsche Bank, still taking

into account all the risks and all the pros, what did Deutsche Bank list as the prospective target for this stock? A It was the opinion of the analysts after all the

analyses had been done, that the price target for the stock, and this is over a 12-month period, was $45. Q That's right here in this first line under the names,

correct? A Q That's correct. Dr. Botosan, I just have one more question for you

because I think we went for -- well, we've been here for four hours, and there's been a break, I want to put this pen right here and give you the opportunity, based on everything that you have been cross-examined on today by Mr. Brennan, just give you the opportunity to come up and change any of the numbers that you feel need to be changed. A No. I don't feel any of the numbers need to be

changed. Q A Okay. Except for one. Can you rub the zero out on the bottom

there? Q I don't know if the Judge will let me do that.

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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 Q argument.

THE COURT: THE WITNESS: MR. HATCH:

No. That one. We'll leave it there, if it's their

And, Your Honor, that's all I have. THE COURT: Thank you, Mr. Hatch.

Mr. Brennan, do you have anything else? MR. BRENNAN: THE COURT: MR. BRENNAN: Yes. Just a minute, Your Honor.

Go ahead. Just a few questions, Your Honor.

RECROSS-EXAMINATION BY MR. BRENNAN: Q I hate to quibble, but I guess as a lawyer I must for The question that Mr. Hatch asked of you had

just a minute.

to do with the district court's ruling issued on June 4th -excuse me, June 9th, 2004. A Q A I do. Do you have a copy of that in front of you? Somewhere. Yes, I do. Now if you could turn to the last page, above the Do you recall that?

judge's signature there is a heading entitled Conclusion. You understand that what was before the judge was a motion by SCO Group to remand the case from federal court back to state court, right?

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MR. HATCH:

Your Honor, now we're getting into

other motions that haven't been at issue. MR. BRENNAN: The only reason I am raising this,

Your Honor, she was asked what the ruling was. THE COURT: To the extent that the witness may

have misrepresented the ruling as to that pertinent part of this order, you may question, but not beyond the pertinent part, okay. MR. BRENNAN: That's all I intend to do, Your

Honor, just to make sure the jury understands. THE COURT: BY MR. BRENNAN: Q So you understand that before the court were three Go ahead.

motions, right? A I did not understand that. What I thought we were

talking about was the motion to dismiss. Q So what was before the court was a motion by SCO Group

to have the case sent from the federal court to state court, right? A Q A Q A If you purport that. I will make that representation to you. Okay. And did SCO win or lose that motion? I don't know because I thought we were talking about a

motion to dismiss.

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Q

And if you look on page 19 of the order, it says,

plaintiff's motion to remand -THE COURT: objection. BY MR. BRENNAN: Q Well, then, just so we have clarity in terms of what Mr. Brennan, I will sustain the

the consuming public thought about the ruling, I would like to have you look at Exhibit W-28, in particular at page -MR. HATCH: MR. BRENNAN: Your Honor, beyond the scope. Your Honor, this has to do with what

was the ruling and what the public's perception was. THE COURT: ruling was. Well, he, on redirect, asked what the

That does not open the door to going to what

the public may have viewed about the ruling. MR. BRENNAN: Well, all I would like to do, Your

Honor, is demonstrate that what was publicized regarding the ruling to the consuming public. That's all I intend to do.

This is a news article that reports on it to the public. THE COURT: I am going to sustain the objection.

It goes beyond redirect. MR. BRENNAN: further questions. THE COURT: In light of that, Your Honor, no

Thank you. All right.

May this witness be excused? Mr. Hatch?

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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 re-called.

MR. HATCH:

Your Honor, this witness, it's

possible she will be needed as rebuttal again in the case. THE COURT: Dr. Botosan, that means you may be I

I would ask you to make yourself available.

would also instruct you do not discuss this case with anyone, particularly in the presence of another witness or potential witness. All right. All right, Your Honor. Thank you. Thank you. Your Honor, in light of the time, we Regrettably, or We would like

THE WITNESS: THE COURT: THE WITNESS: MR. HATCH:

would call by deposition Mr. Gasparro.

maybe not so, we don't have a video for this. to do it by reading. THE COURT:

Mr. Normand agreed to do the answers. Can we move the easel.

Ladies and gentlemen, on occasion the depositions are not videos. Those depositions you've seen to this point So it's not unusual for them to

have all been videotaped.

be presented in the form you are about to see, and that is where Mr. Normand will act the role of the witness in the case and will read the responses on his behalf. Mr. Hatch, if you would please make sure to state the date it was taken. MR. HATCH: Absolutely, Your Honor. This is the

deposition of Mr. Lawrence Gasparro.

It was taken October

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7th, 2004. THE COURT: spelled. MR. HATCH: G-a-s-p-a-r-r-o. For the record, could we have Gasparro

(Deposition of Lawrence Gasparro) Q A Q A Q Mr. Gasparro, when did you first start at SCO? 1995. Did you and Mr. Sontag make presentations to customers? Yes. Did you educate them on the legal basis for your

actions? A Q I believe we were successful. Can you just tell me what it is that you explained to

those customers with respect to the legal action? A As I recall, we had identified certain segments within

the AT&T source code agreement between AT&T, Novell and SCO. There were excerpts of that contract inserted into the slide presentation and a display of the SGI infraction of the literal copying of the source code into Linux. Q Do you have an understanding of what the intellectual

property license for Linux that's referred to in this document is? A Q A Yes, I do. Can you tell me what that is? Yes. The SCO IP, affectionately called IP license for

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Linux, was a product that we announced August 5th, 2003 to provide Linux end users with an option at their discretion to cover any issues or resolve -- resolve is the wrong word, but to, in other words, purchase a license to protect themselves against any risk associated with UNIX source code in Linux. Q Can you identify for me the customers that purchased

such a license? A Q A I can attempt to identify a few for you. Please. Computer Associates, EV1 Web Hosting, ISP. There were

a number of smaller organizations, maybe individuals that obtained this license. Q Did you sell any of these golden compliance licenses,

to the best your knowledge? A Q A Q A Q A Q A Q The EV1 transaction I believe qualified for that, yes. Were you personally involved in the EV1 sale? Yes, sir. Who did you deal with at EV1? I dealt with the CEO. Who was that? Mr. Robert Marsh and counsel. Do you recall who his counsel was? I believe it's Mr. Eric Schaefer. Do you know what law firm he might be affiliated with?

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A Q A

It was an external firm in Houston. Do you know the amount of the sale for that license? I do. The transaction was $800,000 plus additional

terms in marketing contribution. Q Do you have any understanding of how much additional

there was? A Q I think the original agreement was three to 600,000. And in going to the -- it may be the last point -- you

were asked earlier about if you received any negative feedback from your sales force members concerning the licensing program? A Q Yes, sir. And you said that in your mind there was negative Was

feedback because people weren't purchasing licenses. the SCO licensing program affected by Novell's claim? A Q Dramatically.

Was the SCO licensing program also affected by IBM's

funding of the Open Source Defense Fund? A Q Yes. Was SCO's licensing program negatively affected by

Novell's claims of ownership? A Q Yes. My second question, was SCO's licensing program

negatively affected by IBM's payment of $10 million to the Open Source Defense Fund?

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A Q

Yes. With respect to the last questions that Mr. Magnanini

asked you, do you know of specific sales that were lost as a result of -- well, strike that. Mr. Magnanini asked you about Novell's claims? A Q that? A Well, I visited with a number of large corporate Linux Yes, sir. What was your understanding of what he meant by asking

end users in the United States as well as my assigned team and we were providing proposals for consideration to corporate accounts and many of the accounts responded sometimes in writing of written record and/or e-mail or just in direct conference calls why they would object to obtaining such a license. And the Novell claim of copyright

was a major factor as to why several customers did not sign the agreement with SCO. Q A Can you identify the specific customer? Yes, I have. There is a list of customers that we

assembled as my sales organization that was approximately 50 to $60 million of licensing opportunities that we created in the first six months of the licensing program and were involved in discussions based on those amounts. Right now a couple of those accounts that cited ownership issues I believe to be Ford Motor, Google, Cisco,

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and there were numerous others, but I'm very familiar with the dollar amount because I owned that amount 50 to $60 million of licensed opportunity. Q A How did you arrive at that 50 to $60 million amount? Thank you. The proposals that -- there are written

records of the proposals that were assembled, that is the total amount of licensing opportunities that the customers ultimately denied the licensing acceptance because of specifically naming Novell in copyright ownerships. Q I guess I'm trying to ask, how is that number What is that based on?

determined? A

As an example, let's say the list price of a product

was a dollar, the company A had 500, company B had quantity 600, that's how we assembled those numbers. volume and unit pricing. MR. HATCH: reading. THE COURT: MR. JACOBS: Now you have a new Mr. Gasparro. A little on our side, Your Honor. Thank you. That's the end of our So based upon

Mr. Acker will be our actor. THE COURT: I want you to note that counsel are to

be judged by their skills as attorneys and not as witnesses. MR. JACOBS: Q Unfortunately.

And, Mr. Gasparro, you have in front of you what's been

marked as Trial Exhibit A-15, --

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MR. JACOBS:

Your Honor, this has previously been

introduced into evidence. Q -- which is an e-mail from you to Mr. McBride, it

appears, dated May 21st, 2003? A Q A Q Yes. Do you recognize this e-mail? Yes, sir. The first sentence of your e-mail states, after one

week of talking to our customers and reading independent articles, we need some immediate position/leverage to generate IP revenue (Q3) from end users? A Q Yes, sir. Can you explain to me what suggestion you're making to

Mr. McBride? A I think there were, going back, I believe there were a

lot of doubters, it wasn't a very popular position for SCO to maintain, and so the number of approximate naysayers were certainly out there. Q Did you offer Mr. McBride, apart from this e-mail, any

proposals as to how to generate immediate leverage to generate revenues? A No. I had very various responsibilities at this time

and I personally accepted this IP revenue task myself at this time frame. Q The third paragraph of your e-mail states, should we

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consider publishing the results of three independent auditors without divulging actual code. what you were referring to there? A Yes. I recall that SCO had hired a number of auditors Can you tell me

to review UNIX code verse Linux code and found a number of issues. Q A Q Do you know when those analyses were performed? No, sir. Was it just, ballpark, was it in this May 2003 time

period or was it before? A Oh, it would have been at some time before May 21st,

but whether not it was January or March I couldn't comment, I don't know. Q Did it occur sometime between the fall of 2002 and the

spring of 2003? A Q You're asking me to guess and I don't know. Who would have knowledge with respect to when those

analyses were performed? A Q A Q I would imagine Mr. Sontag, Mr. McBride. Do you know who the auditors were? No. Were you ever shown any of the work that was produced

by the auditors? A Q No. Were any of your customers ever shown the work that was

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produced by the auditors? A Q A Q Not by me. By any members of your sales team? No. To your knowledge, was your sales team ever presented

with the results of those analyses? A Q No. You next ask: Can we release the reports under

nondisclosure but not identify the actual code infringement. What were you suggesting be done there? A I was informed that the auditors had found

discrepancies within the source code and Linux code, and to assist me in my quest for communicating to the industry what was going on, needed some -- I was asking for some written documentation to support our verbal position. Q Were you ever provided with any written documentation

to support the verbal position? A Q No. Per this request, no. Can we hire a

The last question that you have is:

popular analyst to review the code infractions and publish a supported theory of our IP. done? A Q I don't believe that was ever done. I guess just to be clear for the record, is it your Do you know if that was ever

understanding the result of three analyses that were

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performed were never shown to anybody under a nondisclosure agreement? A Q I wouldn't know that. At least you were not involved in showing that

analyses? A Q I was not involved. In either your discussions or -- well, in your

discussions with your sales representatives regarding this intellectual property license for Linux, did you ever learn that customers were inquiring as to what specific SCO intellectual property existed in Linux 2.4 and Linux 2.5? A Q Yes. What was the nature of the questions that the customers

posed to you? A Exactly what you've just stated, they wanted more

distinct information. Q When you received those types of inquiries, what did

you do or what did you instruct your sales team to do? A We asked for additional evidence of code infraction to

provide to the customer. Q A Q A Who did you ask that of? It would have been back to Mr. Sontag. Were you provided with any? We were informed under nondisclosure the customers

could access SCO's evidence in Lindon, Utah.

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Q Utah? A Q

Do you know what code was show to customers in Lindon,

Do not. Do you know if they were shown the SGI code that we

talked about earlier? A Q I don't know. Did you ever visit the Lindon, Utah office to view the

evidence yourself? A Q No. Do you know if any of your sales representatives ever

visited the office to view the evidence themselves? A Q They did not. Do you know how many customers went to view the

evidence themselves? A Q No. Did you refer customers to speak with other individuals

within SCO apart from the sales team about their questions? A Q A Q Yes. Who did you refer customers to? We have to -- I have to bore you again with time frame. I guess in the -- after August 2003, when you began

selling the Linux license. A Q A Through my last day at the company? Sure, the last day. On limited occasion additional information via

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conference call may have included Mr. Sontag, and on at least one and possibly one or two, counsel from SCO. Q Sitting here today I take it you cannot identify for me

the specific SCO intellectual property that's contained in the Linux 2.4 or 2.5 kernels? A That's correct, Chris. THE COURT: Mr. Normand. MR. NORMAND: Your Honor, we would next present Mr. Langer was Thank you, counsel.

the deposition of Phillip Langer by video. deposed on November 5th, 2004. THE COURT: Thank you.

(Deposition of Phillip Langer) Q A When did you first become employed by the SCO Group? June, I think, 30th, '98 from the original Santa Cruz

operations. Q A Q A What was your position when you joined Santa Cruz? Sales associate. What were your responsibilities in that position? I was responsible -- I was responsible to a mentor who

was the corporate account manager for three states in the Midwest: Illinois, Wisconsin and Indiana. And I was

associated with doing sales tasks, learning cold calling, learning the sales process for the next half year and then next year.

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Q

What types of products were you selling at that point

in time? A Q A Q A Q Cruz? A Q A Corporate account manager. When did you become corporate account manager? I think late -- let's see, late -- probably late '99, UNIX. UNIX support and services.

Would that be UnixWare and OpenServer? Yes. Both of those products? Yes. What was the next position that you held within Santa

2000, right around there in the first quarter. Q What was your responsibility as the corporate account

manager? A To deal with large corporate account end users, named

account lists within my state area, which at that time I think was southern Ohio, Kentucky and Missouri. Q Again, you were selling UnixWare and OpenServer at that

point in time? A Q A UnixWare, OpenServer, support and services around then. How long did you hold that position? Until -- through December -- or actually through

January of 2004. Q Through January 2004?

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A Q

Yes. In January 2004, what position did you take at The SCO

Group? A I took the position of the regional director of

intellectual property licensing. Q A What were your responsibilities in that role? My responsibilities were sales of our UNIX Linux IP

license. Q A Q A Q You held that position until you left in August 2004? Right, correct. Who did you report to from January 2004 to August 2004? Larry Gasparro. Now after February 2004, when you became the regional

director for intellectual property licensing, did you then have any sales of licenses to customers? A Q Yes. Can you tell me which customers you were involved in

selling licenses to? A I got -- well, we did deal with Questar, which I think So

I got credit for, but I didn't have any dealings with.

it came into my bucket, so to speak, and I probably got the last contract faxed from them, but I didn't do any of the selling. And then we did the EV1 deal, and everyone's Those were the only two. I can't think if I can't

entered in.

there was like little onesie, twosie things.

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remember, but those were the two significant. Q A Q Did you have any involvement with Computer Associates? No. So those were the only two customers that you can

recall that actually purchased licenses? A Q Right. Do you recall who you contacted to purchase licenses

during that time period, from February to August 2004? A No. I mean, I contacted a lot of people. I couldn't

tell you off the top of my head. Q And how was the responsibility divided? Did you

contact all the people within this Midwestern region or was it nationwide? A I had the west region, which went from Illinois

basically down over, except for northern California, Washington and Oregon. I had southern California and the

rest of the western states. Q Did there become a point in time when Novell raised a

question over the title to SCO's IP in UNIX? A Q Yes. Do you recall them making those pronouncements

publicly? A Q Yes. And did the fact that Novell made those public

pronouncements questioning SCO's ownership of UNIX's IP

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negatively impact your ability to sell licenses? A Q Yes. Do you know when Novell made this announcement that you

talked about with Mr. Samuels? A Novell first made the announcement, it was last year in

2003, that they were questioning the claims of the UNIX that I think we -- we came out with our Amendment 2. recanted. They

Then they came out later, I think it was like

August 2003, that kind of time frame, they started leaking that they owned it. to kind of a hold. Then once the suit was filed, it came I mean, we were always -- we started to

get a lot more once Novell started that they owned and they can indemnify because they had UNIX rights, were making that public. Then all the licensees -- potential licensees

became very interested in, well, if you don't own it, we're not going to buy a license from you, which really, you know, put a hold to selling licenses. Q So it's your testimony that you were unable to sell

licenses because of Novell's announcement? A Yeah. I mean, it put a pretty big dampening effect on

how we were able to approach people when the intellectual property you're trying to license to them is in question of ownership. Q Did you ever do anything to show to customers that you

were in fact the owner of the copyrights at issue?

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A

I mean, we would tell them to look at our Web site for You can see

Amendment 2 and read through the contracts. that it was transferred. for six years.

You know, we've been selling UNIX

Up until now there has never been -- you Other licensees had You know, we had We had owned

know, customers were paying for UNIX. licensed UNIX's intellectual property.

this -- you know, to us, it was a no-brainer. it. Q A Q We had been spelling UNIX. Have you -It was ours.

So we went into our Web site with our contracts. Did you ever make any presentations to customers about

the ownership issue? A No, I mean, not specifically on that. We may have

mentioned that, you know, look at our -- I mean, we'd point them to the contracts and here are the contracts. You take

a look -- have your legal team look over the contracts, advise you of what to do. Q Have you personally ever reviewed the contracts that

you are talking about? A I've looked them over as -- you know, I am not an

attorney, so it's a contract. Q Did you have any projections of what revenues you could

have obtained were it not for Novell's announcement? A I don't have any projections on hand. I know we had a

pipeline that we're starting to build, and when the Novell

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issue started to come up, I mean, I thought we were going to be able to do at least -- I mean, a couple million to three million in my territory I was hoping for. But when that

type of -- once the questioning of the ownership came out, the pipeline was killed. Q And this pipeline that you're talking about, are you

using pipeline in the same sense that you were reviewing -you were using the word pipeline in response to the earlier exhibit that we looked at? A Exhibit 239 I believe it was.

Similar, in that these were companies I had talked to,

involved with, had talked about or we were in dealings with to set up meetings. So there was potential there. But, no,

there was no one exactly on the front doorstep ready to purchase a license. Q So you didn't have any reasonable expectation of this

revenue? A We did have an expectation because we were in

involvement with them and they were interested in hearing about our licensing and possibly buying a license. Q So -- just so we're clear, when you used the word

pipeline with respect to the Linux sales, you had no reasonable expectation of sales, but when you used the word pipeline here, you did have a reasonable expectation of sales; is that what you're saying? A Yes, different type of -- when I use pipeline, yes,

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different types of pipeline.

For the Linux sales, that

would have been new business that was outside my normal business of UNIX. This was my pipeline of my only business So this was deals I was

that I was working on at this time.

actually in front of daily and I had to close to make commission. So I was much more involved in that pipeline

than the other. Q This is starting in February 2004 that you're talking

about the pipelines? A Q Yes. Was that before or after Novell made their

announcement? A That would be -- well, their initial announcement

before we could counter was before I took over this. Q So you were still -- you were projecting two to $3

million of revenue in your region even after Novell made their announcement; is that what you're saying? A Because they recanted. They made their initial

announcement.

Then they recanted after Amendment 2 and then And then once a -- once we were

it started to trickle up.

heading to court with Novell, then it became a true -- it was viewed as the ownership issue is in question, and that was in -- I think that was in mid January or February -- mid February, because we had built up this, and then once people started to hear wind of what this lawsuit was coming down,

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because not everybody was dealing with it like everyone else -- like we are all day to day, then it becomes they start doing their homework they realize, hey, there's a question about the ownership. You know, until that gets really settled and it looks like that it's not -- you know, it looks like it may be a possible problem for you, then we're not going to talk about it until that issue has been cleared up. Q And just so we're clear, were you projecting two to

three million of revenue annually, for the year, or for a specific quarter? A I thought I could do that for the year. I mean, with

some of the accounts we had on, we had large accounts, and with the list pricing now, that can go up or down, depending on, you know, who's buying, who's selling. Q These would all be new customers to SCO, correct, not

old customers? A Q Correct. Did any of the potential customers that you approached

give you a specific reason for declining to buy a license that Novell had claimed to own the copyrights? A Regal Entertainment Group. I think that's what they They were set. They were

are, Regal Entertainment Group.

moving forward with looking -- looking forward to buy a license, and they wanted to get it done within the month. I

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think this was the end of April.

They finally came back and

said we can't purchase a license because we can't buy your intellectual property because there is not clear title on it like we do when we buy movies, which have clear copyright title. So we can't make the same type of intellectual

property investment with you as we would with our other vendors. Q Do you know what the size of the potential sale to

Regal was? A It was -- it was on their front end. It would have

been I think three to -- 300,000, $350,000. Q Apart from Regal, were there any other customers that

you remember specifically saying that we were not going to purchase a license because of Novell's announcement? A I had some letters back from some. I think one was -I mean, I can't

I think possibly -- I can't remember.

remember the exact companies, but I know I had a couple letters back that said, you know, until your ownership issue is settled, please do not contact us, then we'll be willing to sit down and work that out. But if you have an ownership

issue, we cannot buy anything from you. MR. NORMAND: designations. THE COURT: MR. JACOBS: Thank you, Mr. Normand. We have a few moments of additional Your Honor, that completes SCO's

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testimony from Mr. Langer. THE COURT: Q Go ahead, Mr. Jacobs.

But you don't know the specific code that's allegedly

in Linux that SCO claims rights to? A Q No, I don't know specifically. Have you ever asked anyone to review for you what

specific code there is? A I have asked for more information from some of our

customers, but -- or potential customers, but, no, I have not seen any. Q When you asked for more information, who did you ask

for more information? A Q A I would ask my boss, Larry Gasparro. Were you ever provided with anything more? No, not really. We would get just general

explanations, but no in-depth information. Q First, you mentioned that customers -- potential

customers of the Linux licenses you were selling requested that you do line-by-line code comparisons for them; is that correct? A line. Q You told them that SCO would not do that for them; is Yes, they wanted to be able to do their own line by

that accurate? A No, we couldn't do that.

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Q A

You couldn't do it or you would not do it? We would not do it. I don't know if we -- I don't know

if we can or cannot do it, but I know we would not do it. Q You told those potential customers you would not do

that for them? A Right. MR. JACOBS: testimony. THE COURT: MR. NORMAND: Thank you. Your Honor, we would again present, That completes our additional

by play acting, the deposition of Gregory Pettit, taken October 7, 2004. MR. HATCH: THE COURT: Did you give the date? He did.

The spelling of the witness's name would be helpful. MR. NORMAND: P-e-t-t-i-t.

(Deposition of Gregory Pettit) Q Mr. Pettit, are you currently employed by The SCO

Group? A Q A Q A Yes, I am. What is your current position? Regional director, intellectual property licensing. What jobs have you held since graduation? I spent a year with Nixdorf Computer, a year with a

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company called SDL, four years with Boeing Computer Services, ten years with Digital Equipment, and 11 plus years with SCO. Q A The original SCO now The SCO Group.

Do you know what SCOsource is? SCOsource is an umbrella statement for a group of

people at SCO who are worrying about SCO's intellectual property in the marketplace. Q Did any -- during the summer of 2003, did any customer

approach you and ask you about SCO's alleged intellectual property rights in Linux? A I'm sure we had discussions with customers who were

interested in understanding why, why we were saying what we were saying. Q this? A NASDAQ, Getronics, CVS. Those were the folks I can Do you remember which customers approached you about

think of off the top of my head. Q Of the ones you've called, do you remember which ones

asked for more information or were interested in setting up a meeting? A I recall setting up -- actually, I did not get any Sorry.

successful -- I got one confirmation of a meeting. Q A Q Which one was that? Raytheon. I'm sorry?

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A Q

Raytheon. Did you or someone else actually meet with Raytheon on

this issue? A Q A Q A Q Yes. Did you go to the meeting? Yes. Who else went? Larry Gasparro. What additional information was given to Raytheon at

the meeting? A We had a presentation, as I recall, that just touched

on two points, we had problems with our intellectual property in Linux in two ways; one was copyrighted material and one was by contract. Q Were any specific examples of code provided to

Raytheon? A I don't recall if the Malloc code was shown or just I believe it was referred to.

referred to. Q A Q A

So it was just you and Mr. Gasparro at the meeting? Yes. What was Raytheon's response to your presentation? Basically it was thank you for the information and as a

result of sensitizing them to a potential problem, they were going to just go off and investigate and understand how they were using Linux in-house.

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Q

Were there other customers who asked for more

information but didn't want to set up a meeting quite yet? A Q A Yes. Do you remember which ones those were? Again, are you asking me as a result of this? Raytheon was the only thing that happened. Q As a result of this or as a result of any other

communications you might have had about SCO's alleged property rights in Linux? A Yes, there were several others. I want to make sure -I believe it

I get confused on some of the financial shops. was -- we'll come back to them. Pixar, Cisco -Q A Sorry. C. -- Merrill Lynch. Cisco with a C or S?

There were several others who

expressed interest in seeing more material. Q Did you offer any of the customers a license for the

use of this alleged intellectual property? A Q A Q A Q I was asked to prepare a proposal. Asked by who? Merrill Lynch. Did you ever prepare a proposal for Merrill Lynch? Yes. What were the terms of the proposal?

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A

For this range of machines, it's this much money.

For

this range of machines, it's this much money. Q A What was Merrill Lynch's response? They chose not to pursue the proposal because of the

activities of Novell, which confused the marketplace and who owned the UNIX intellectual property. And that was the

primary reason for them postponing any action on the proposal. Q You're looking at what has been marked as Exhibit 162.

Please take a look at that and let me know if you recognize this document? A Yes. MR. HATCH: SCO Exhibit 188. Your Honor, 162 in that deposition is

I would move its admission at this point. No objection, Your Honor. It will be admitted.

MR. JACOBS: THE COURT:

(Plaintiff's Exhibit 188 was received into evidence.) MR. HATCH: Mr. Calvin, just highlight that. Blow

that up for us, the body of it. Are we ready? Q The exhibit is a letter from Sylvia Khatcherian from

Morgan Stanley to yourself? A Q Uh-huh. Do you remember ever providing Morgan Stanley with the

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additional information Ms. Khatcherian is asking for? A I don't believe we did. Again, the point they made the

licensing program was to work with people who were interested in working with us. And Morgan Stanley's

position was one of show me more information and, by the way, disprove press reports SCO's claim of ownership. Q You've been handed what has been marked as Exhibit 165.

Would you take a look at that that and let me know if you recognize this letter? A Yes. MR. HATCH: Your Honor, Exhibit 165 of the I move

deposition has now been designated as Exhibit F-27. its admission as well. THE COURT: MR. HATCH: MR. JACOBS: F-27? F-27.

It may already be in, Your Honor.

This is the Google letter that I think we saw earlier, F-27. THE COURT: It is.

It's in already, Mr. Hatch. MR. HATCH: Q Thank you, Your Honor.

Do you remember if in response to this letter you or

anyone else at SCO provided Goggle with any additional information regarding SCO's alleged rights to the Linux code? A Yes. Again, the specifics of this letter I don't

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recall, but we had several in interactions with Michael. Some of the interaction -- unfortunately, he had sent me correspondence I hadn't received, so that was the tone of this letter. But when we finally hooked up, the essence of

the communication was, Michael, we're prepared to come in nondisclosure, walk you through the material so you can make an educated decision on what the exposure was. Q A Q A Q A Did you ever have a meeting? No. Why not? Michael chose not. Did he say why? I wasn't the last guy to talk to him so, no, I don't

know what the answer was. Q A Who was the last guy to talk to him? I don't know. I know I handed it over to other people

that worked with Michael for a while and then let it go. Q In conjunction with the Raytheon and your discussions

with them in terms of trying to get them to receive a license, at that point in time were you having difficulty with potential licensees as a result of activities by Novell? A Q Absolutely. Did those activities by Novell make it difficult for

you to obtain licenses for companies, including Raytheon?

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A Q

Absolutely. Did the activities of Novell include activities that

brought into question whether you, in fact, owned the intellectual property you were trying to license? A Q Yes. Were those questions that were raised by Novell what

caused you having great difficulty, if not impossibility, in selling any licenses? A Yes. MR. HATCH: THE COURT: MR. BRENNAN: Your Honor, that ends our reading. All right. Your Honor, with you permission, I

will assume the role of the reader. THE COURT: MR. JACOBS: Thank you. This is some brief additional

testimony of Mr. Pettit. Q Did any of your -- any of the companies you called, did

anyone ask you to provide them with more detail as to SCO's alleged intellectual property rights? A Q A I believe that was one of the responses. What did you tell them when they asked? I don't -- the interaction wasn't interactive. Most said no thank you. So this

was a request for a meeting.

Occasionally we got a do you have something you can send me. Q What would you have sent if they asked?

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A

We would have sent the -- no, actually, I don't think I'm sorry. This

we would have sent anything at this point.

was strictly we were trying to come in and meet with you and educate you. As it said, we were going to have an

executive, one of the SCO executives, come in and actually walk them through the issues. It wasn't -- that's what the

intent of this correspondence was. Q So if someone asked you for more detail, your basic

response would have been someone else will get back to you on this? A The reason for the call was so we could come in, It wasn't meant to be,

present this information to you. here's an information packet. Q

You spoke here of them trying to pull together some Then you said they put

materials to present to Raytheon.

things on hold and they never finished putting together the presentation. I guess we established that they never Do you know if they

finished the material for Raytheon.

made any similar presentation for other companies? A Q A Oh, okay. I'm sorry. They didn't. In that context, no. You don't know or they didn't do it? Well, actually, I can't speak

definitively. Q A

I can speak to my customer community.

You don't think they did? My customer community, no.

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MR. JACOBS: Mr. Pettit. THE COURT:

That ends the additional testimony of

Thank you.

Do you have a five-minute witness? MR. HATCH: We would probably call Mr. Maciaszek, He's not too

and he's certainly not a five-minute witness. long, but certainly not five minutes. THE COURT:

We'll go ahead and recess for the

Ladies and gentlemen of the jury, I do have to specifically stress one thing. During Dr. Botosan's first

testimony today you heard reference to the fact that she got on the Internet and Googled and used other means whereby she found out about this case. That is something that has been As

covered by this Court in instructing you what not to do. I've told you several times, you are not to be doing any

research on your own, you are not supposed to be discussing this case or doing anything on your own that will give you any information. You make your decision in this case only

on what you hear in this courtroom by way of testimony, the law you will be given by the Court at the end of the case. I would again remind you that you should avoid any reading of about this case or listening to anything or watching anything on television or anything else pertaining to this matter nor should you be discussing the case with anyone.

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I believe that's it. today than normal. the street.

I hope you had a nicer lunch

It's good advertising for the guy across

Ms. Malley, if you would please assist the jury into the jury room. (Jury excused) THE COURT: What's your schedule for tomorrow,

MR. SINGER:

Your Honor, we would pick up with

Mr. Stone, who I understand will be here first thing in the morning. We'll then have Ms. O'Gara's deposition. I think

that's about 20 or 30 minutes in total.

We would then have

Mr. Maciaszek, Mr. Nagle, and Mr. Tibbitts, while at that point while not resting our case because there will be witnesses next weak, Mr. Messman, Mr. Keller. I guess being

an optimistic at heart, I am hopeful maybe if there is time for one witness on the other side, we would ask them to tell us who their witness would be in case we get to that point. MR. BRENNAN: Your Honor, our intention at this

juncture, if you get to that, is to call Mr. Terry Maciaszek, who is our damages expert rebuttal witness. THE COURT: MR. BRENNAN: All right. I'm sorry, I misspoke. I hope

Mr. Musika is not here and heard me butcher his name. That's our intention. My apologies.

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THE COURT: before we recess? MR. ACKER: game, Judge.

All right, counsel, is there anything

Good luck this afternoon with the

Is Utah State this afternoon? I'll hold that good luck for tomorrow

THE COURT:

Thank you very much, Mr. Acker. MR. TIBBITTS: THE COURT: BYU won. We do have a

We'll be in recess.

hearing this afternoon, counsel, so if we could clear things off, please. (Whereupon, the trial was continued to Friday, March 19, 2010 at 8:30 a.m.)