SCO Grp v. Novell Inc

Filing 865

NOTICE OF FILING OF OFFICIAL TRANSCRIPT for dates of March 22, 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 by removing restricted text on 7/19/2010 (rks).

SCO Grp v. Novell Inc

Doc. 865 Att. 1

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(Recess) THE COURT: MR. SINGER: What will be next? I believe what will be next is we

will turn over the baton, although we are not resting our case, and, Mr. LaSala, we are informed, would be their first witness. MR. ACKER: MR. SINGER: That is correct, Your Honor. There are a couple of issues

concerning Mr. LaSala before bringing back the jury, if we could take a few moments now. THE COURT: MR. SINGER: Let's do it. One of them I think is a very quick

issue, and I believe I'm entitled to elicit the fact that there is a joint defense agreement between IBM and Novell, and it goes to credibility. I am not planning on using the

agreement or going beyond that, but I believe that is relevant just like other things are relevant to the credibility of witnesses. MR. ACKER: We would disagree, Your Honor.

Essentially he is trying to put before the jury that there are protected communications between I.B.M. and Novell and we think that is improper. THE COURT: Well, let me see. Are you trying to

put before the jury that there are protected communications, or are you focusing only on the fact that there is a joint

Dockets.Justia.com

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defense agreement? MR. SINGER: MR. ACKER: defense agreement. Only on the latter. That is the very purpose for the joint That is the very essence of the joint

defense agreement itself. THE COURT: But if there are no questions elicited

to that effect, the jury will never know that. MR. ACKER: Well, then there is no relevance to

the fact that there is one. MR. SINGER: The relevancy is that they have

entered into a joint defense agreement believing that their interests are aligned. THE COURT: I will allow you to ask a limited

question to that extent. MR. SINGER: that -MR. ACKER: Before we move on, we ask that the Your Honor, there are three documents

jury be instructed as to what is a joint defense agreement, Your Honor, so that the jury has context to place that in. MR. SINGER: MR. ACKER: Well -Otherwise it is going to be left as it

is, something that is nefarious or untold as opposed to it is common in everyday -THE COURT: May I ask this, if I ask Mr. Singer to

elicit from your witness what it is in the most bare bones

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terms, would that be an agreeable way to do this? MR. ACKER: I'll do it on redirect. I need to be

allowed to do it on redirect. THE COURT: that. MR. SINGER: There are three documents, and these You certainly will be allowed to do

are Exhibits 6, 7 and 8 to the memorandum which we submitted to the Court on privilege and that will come up in connection with Mr. LaSala's testimony. These are all

internal documents among lawyers, for the most part, at Novell. There may be a business party in one of the Part of the documents were redacted and we

communications.

don't think these are admissible. First of all, they are self-serving hearsay. You

can't create a memorandum and then say, well, I'm going to introduce this to help prove the point of what would be contained within the context of that memorandum. that, there is a serious privilege issue. Beyond

In the course of

this communication you selectively redact certain parts and want to use other parts of the same memorandum. The

attorney-client privilege protects communications, and they can't selectively use part of these communications while withholding others. MR. ACKER: What these are, Your Honor, is these

are e-mails that Mr. Jones wrote immediately after having

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telephone conversations with Mr. McBride.

In fact, these

are exhibits that Mr. Singer himself has shown to witnesses including Chris Stone when he testified and he was shown these exhibits by SCO. THE COURT: MR. ACKER: Honor. MR. SINGER: MR. ACKER: No. He is wrong about the hearsay issue as Have they been admitted? They have not been admitted, Your

well, but I'll get to that in a second. The only portions that have been redacted, Your Honor, are legal advice or opinions of lawyers in the e-mails. The actual substance, that is the factual

percipient witness testimony regarding what was said by Mr. McBride to Mr. Jones on these different dates, that has not been redacted and that was inquired about at length in Mr. LaSala's deposition and in Mr. Jones' deposition as well. So he is wrong about the privilege issue. On the hearsay issue, it is a quintessential past recollection recorded, Your Honor. Here is a guy that has a

telephone conversation with Mr. McBride, types an e-mail saying what was said some seven years ago, and he certainly can use that document at the very least to testify about the substance of the conversation. We would submit under past

recollection recorded it is also admissible as a non-hearsay

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document. THE COURT: I can see it being used to refresh his

memory, if he is asked do you remember the conversation and do you remember what was said and what may have been communicated without the document itself being admitted. You're seeking its admission -MR. ACKER: Well, I don't know how the testimony

is going to go, Your Honor, but we certainly can use these documents with these witnesses to place them in the frame of mind of when certain conversations occurred and when they learned about certain conversations and then allow them to testify -THE COURT: MR. ACKER: To refresh their memory? Yes, and to testify about the

substance of what they knew. THE COURT: Again, the documents can be used to

refresh memory without being admitted to the jury. MR. ACKER: I understand, Your Honor. I also

think that this is a classic example of past recollection recorded. There are many events where they took place years

ago where someone contemporaneously wrote it down at the time of the event immediately after the event what happened. The classic example is writing down a license plate after seeing it outside a window. Seven years from now you may

not remember that license plate, but you know you wrote it

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down and you can testify, yes, I saw it and I wrote it down. You can look at the piece of paper that you wrote it done on and say, yes, that is it, then you certainly can use that document to testify and we also think it is admissible. MR. SINGER: There are very limited exceptions for If the witness is to

this past recorded recollection.

testify from his memory he can't introduce a self-serving document. If he does not have a recollection it can be used

to refresh his recollection, but it does not come into evidence. I think that would resolve the issue, as long as If you're

you are not seeking to move this into evidence.

not seeking to move it into evidence, I don't think we need to deal with the privilege issue, because he is just using it to refresh recollection. MR. ACKER: Then, of course, if there is

cross-examination of Mr. Jones or Mr. LaSala on these conversations with Mr. McBride, or SCO attempts to cast doubt on their ability to recall the conversations or what the substance of the conversations are, then we certainly can use the documents as evidence that this is a prior consistent statement and past recollection recorded to bolster their memory of that conversation when it is being alleged that they can't remember. THE COURT: The rule on recorded recollection says

that the memorandum of record may be read into evidence but

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may not itself be received as an exhibit unless offered by an adverse party. So it may be used and it may be actually read, but it can't be admitted and sent to the jury. MR. ACKER: THE COURT: MR. SINGER: That is my understanding, Your Honor. All right. Your Honor, we don't believe that

they even get to do that unless we challenge the testimony on direct as to the recollection. THE COURT: MR. SINGER: THE COURT: MR. SINGER: MR. ACKER: Let's wait and see how that plays out. Yes. Is that all that you have? That's all that we have, Your Honor. That's all that I have.

(WHEREUPON, the jury enters the proceedings.) THE COURT: All right.

Go ahead, Mr. Normand. MR. NORMAND: Tibbitts. MR. BRENNAN: THE COURT: I have just a few, Your Honor. Go ahead. RECROSS-EXAMINATION BY MR. BRENNAN Q. Mr. Tibbitts, so that we can be clear, when you went I have no further questions for Mr.

and made various presentations to potential SCO licensees

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and were talking about UNIX code, you were referring to pre-asset purchase agreement versions of UNIX, right? A. Q. In what context? Well, when you were talking to potential licensees

about the SCOsource program. A. Q. In part, yes. In fact, if we could take a quick look at Trial Exhibit

1, and we would like you to look at Schedule 1.1-A, Roman numeral six that you were asked about by Mr. Normand. You'll see that there are various products that you have described, and each of those products is a pre-asset purchase agreement version of UNIX, correct? A. Q. I believe that is the case, yes. Then if we could take a look at amendment number two to

the asset purchase agreement, and Mr. Normand asked you about subpart B of amendment number two. Let's just read together what this provision of amendment number two addresses. You'll see at the top it

says, quote, except as provided in Section C below, and notwithstanding the provisions of Article 4.16, Sections B and C of the agreement, any potential transaction with an SVRX licensee which contains a buy out of any such licensee's royalty obligation shall be managed as follows. Do you see that? A. I do see that.

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Q.

Then there are five numbered paragraphs. Do you see those as well?

A. Q.

Yes. So amendment number two and this subpart B that is

addressed by its own terms, was focused on the buy out of licensee's royalty obligations, right? A. That language is there, yes. MR. BRENNAN: THE COURT: you would rather stay. THE WITNESS: THE COURT: MR. SINGER: It was a lot of fun. Mr. Singer. Your Honor, at this time, while there Thank you. No further questions. Thank you. Unless

You may step down.

are other witnesses we will be calling later in the week, we are yielding the floor to Novell. THE COURT: MR. ACKER: Mr. Acker? Novell would call as its first witness

Mr. Joe LaSala, and he will be here in a second. JOSEPH A. LaSALA, JR. Having been duly sworn, was examined and testified as follows: THE WITNESS: Yes. Good morning. The last

My name is Joseph A. LaSala, Junior. name is L-a-S-a-l-a. DIRECT EXAMINATION

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BY MR. ACKER Q. A. Q. A. Good morning, Mr. LaSala. Good morning. Tell the ladies and gentlemen what you do for a living. Yes. I am general counsel of a company outside of

Washington, D.C. called Discovery Communcations. Q. Is there any relationship between Discovery

Communcations and the Discovery Channel? A. Yes. The Discovery Channel is part of Discovery

Communcations. Q. A. Q. A. Q. That is the channel of the Deadliest Catch, am I right? Yes, among others. How long have you had that job, sir? Since mid January of 2008. What are your responsibilities as general counsel at

Discovery Communcations? A. Broadly I'm responsible for all legal matters that the I supervise a legal department of I advise management

company is involved with.

about 20 lawyers on a worldwide basis.

and the board of directors of the company on legal matters. Q. Back up and tell the ladies and gentlemen of the jury

what both your undergraduate and advanced degrees are in. A. Yes. I received a bachelor's degree from the Catholic I

University of America in Washington, D.C. in 1976.

received a law degree from the Columbus School of Law at the

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Catholic University of America in 1981. Q. What job did you have before going to work for

Discovery Communications? A. Q. I was general counsel at Novell. During what period of time were you general counsel for

Novell? A. Q. From July of 2001 through mid January of 2008. Generally what were your responsibilities in that

position between 2001 and 2008? A. Similar to those that I have at Discovery. Again, I

was the general counsel there responsible for all of the legal matters at Novell, supervising the staff of lawyers, and advising the management of the company and the board of directors on legal issues. Q. Who were the senior executives that you worked with

during the period at Novell between 2002 and 2003? A. Principally Mr. Jack Messman, who was the C.E.O. of the

company, Mr. Chris Stone who was the C.O.O. of the company, and Mr. Carl Ledbetter, who was our chief technology officer and our then C.F.O., chief financial officer. Q. Why did you decide to leave Novell in 2008 and go to

Discovery? A. I had an opportunity to go to Discovery. I was

recruited by the company to come to work for them, and after considering all of the alternatives and considering what was

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in the best interest of myself and my family I decided to make the move. Q. Let me place you back in time to the fall of 2002. At

some point during the fall of 2002 did you became aware of issues at Novell relating to a man by the name of Darl McBride and a company called SCO? A. Q. A. Yes, I did. How did you become aware of those issues? I received a series of e-mails and phone conversations

from a lawyer who worked for me conveying to me conversations that he and others had had with Mr. McBride around that time. Q. Had you ever heard of Mr. McBride or SCO prior to the

fall of 2002? A. Q. No, I don't believe that I had. Let me show you what we have marked as K-11. If you could take a look at that, sir. Do you recognize K-11? A. Q. A. Yes, I do. What is it? This is an e-mail from Mr. Jones to me and one of our

colleagues concerning a conversation that he had had with an assistant to Mr. McBride around this time. Q. It advises --

Before going into the substance of it, is this an

e-mail that you received on or about November 20th of 2002?

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A. Q.

Yes, it is. In addition to receiving this e-mail from Mr. Jones,

did you also speak with Mr. Jones? A. Q. I did. Did Mr. Jones relay to you information regarding his

conversation with Mr. McBride? A. Q. He did. What did he say? MR. SINGER: Jones works for Novell. MR. ACKER: It goes to Mr. LaSala's state of mind, Objection. This is hearsay. Mr.

which is clearly at issue given their slander of title. THE COURT: BY MR. ACKER Q. A. What did Mr. Jones say? Mr. Jones conveyed to me the substance of his The Court will overrule the objection.

conversation that he received from Mr. McBride's assistant, which was essentially that she was asked by Mr. McBride to gather documents related to an asset purchase agreement that occurred between S-C-O and Novell in the mid 1990s. In addition, Mr. Jones told me that he understood that one of the purposes of the request to be to further SCO's interest in asserting intellectual property rights that it thought it owned related to UNIX against Linux end users. Q. What was your reaction to this initial conversation

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with Mr. Jones? A. Well, my initial reaction to this conversation was, It

again, pretty much one event at a busy day at Novell. was the first I had heard of this kind of thing.

I said to

Mr. Jones, well, thank you, and I appreciate you telling me and keeping me informed. developments. Q. Let me show you another document that we have marked as Let me know of any further

Exhibit R-11. Do you recognize that e-mail? A. Q. Yes, I do Is this another e-mail that you received from Mr.

Jones? A. Q. A. Q. It is. And the date you received it? December 4, 2002. What information did Mr. Jones provide to you in this

e-mail, R-11? A. Well, he wanted to update me on further communications

that he and one of this colleagues had with Mr. McBride at SCO. He conveyed to us Mr. McBride's renewed request for

Novell's help in getting these documents that he had been asking for. He, for the first time to my knowledge, referenced the fact that SCO was intending to announce a Linux licensing

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program, and that he very much wanted Novell's cooperation in getting copies of those agreements in furtherance of SCO's Linux licensing program. Q. Your reaction to this second e-mail and communication

from Mr. Jones, was it any different than your reactions to the first? A. Well, slightly. I guess my concern would be slightly

more heightened at that point, understanding that Mr. McBride had in mind a specific program related to Linux, and I knew at our company that Novell had interests in getting into and had taken certain steps and made certain investments in the Linux business, so I was I guess slightly more concerned at that point about what Mr. McBride might be up to. Q. At this point in time, in December of 2002, had you

gone back and read the asset purchase agreement or any of its amendments? A. Q. No, I had not. Were you involved at all in the asset purchase

agreement and the execution or negotiations of the agreement back in 1995 or 1996? A. Q. No, I was not. What was your response back, if any, to Mr. Jones

getting the second communication in early December of 2002? A. Well, my response was, okay, Greg, keep me posted for

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sure if you get anything further, because this seems to be going in a more serious direction than perhaps we had initially thought. Mr. McBride makes reference to Greg and

Greg tells me that in his e-mail that, you know, he might be elevating the conversation to others in the company. Q. Let me show you what we have marked as N-12. Do you recognize what has been admitted as N-12? A. Q. A. Yes, I do. What is that? This is a copy of a press release that SCO issued on

January 22, 2003, where it announces the establishment of SCOsource to license the UNIX intellectual property. Q. Did you become aware of this announcement on or about

January 22? A. Q. Yes, I did. What was your reaction at Novell when you saw this

press release in January? A. Our concern at this point is very high, as you might

imagine, given our interest in Linux, that upon reflection this fulfilled Mr. McBride's promise that he was going to be announcing a campaign against Linux end users asserting that SCO was the owner of the copyrights to UNIX. We had a point

of view ourselves on that ownership position that we subsequently did more work on, and so we were quite concerned at this point in time.

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Q.

Why is Novell concerned that SCO is announcing this Why does that create issues for Novell?

SCOsource product? A.

Principally because Novell, as I mentioned a few

moments ago, had previously announced its intention to get involved in the Linux business. There had been a lot of

work done, there had been a lot of planning done, and we viewed Linux as an area of computing that we thought we could really create some value and service customers well. We saw this as a threat to our potential business opportunities and our ability to be successful with Linux. Q. Why was this campaign a threat to Novell's intent to

get into the Linux business? A. Because if Mr. McBride and SCO were threatening Linux

end users with copyright infringement and making demands for payment from them, that would have the potential to slow down our own initiatives and throw some roadblocks in the way of our ability to conduct our own business. It would

effect existing relationships with customers as well as potentially future relationships with potential customers. Q. Let me show you another e-mail that is marked as W-12. Do you recognize what we have marked as W-12? A. Q. A. Yes, I do. What is it? It is yet another e-mail from Mr. Jones to me dated

February the 25th of 2003, where he updates me on subsequent

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conversations that one of our colleagues had with Mr. McBride concerning the subject that Mr. McBride had been calling about, the copyright ownership related to UNIX and his desire to get copies of the asset purchase agreement. Mr. Jones tells me that our colleague, and his name was Mr. Wright, told Mr. McBride that we were not in a position to fully evaluate the request at that time. Again, Mr. McBride suggested that he had a relationship with Mr. Messman, our C.E.O., and that he might have to take it upon himself to elevate this issue to Mr. Messman. Q. Given the information that you have to date about the

earlier communications in the fall of 2002, and the announcement of SCOsource and now this e-mail, what is your reaction in February of 2003? A. Our concern is quite heightened at this point in time.

Again, coming on the heels of the SCOsource announcement just a few weeks before, and wherein SCO asserted its ownership of the UNIX copyrights, and the fact that Mr. McBride was continuing to ask us for documentation and cooperation such that he could pursue this campaign really caused us concern. Q. At some point in time do you and your staff sit down

and review the A.P.A.? A. Q. Yes, we did. Approximately when was that?

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A.

Well, I don't remember exactly when it was that we It was around this

began to review the A.P.A. in earnest. time, though.

I would say it was sometime in the February,

late February time frame is my best recollection. Q. A. Upon that review, what conclusion did you reach? Well, the conclusion that I reached after our review of

the asset purchase agreement was that Novell was the rightful owner of the UNIX copyrights, and that they had not transferred to SCO as a result of the asset purchase agreement that was executed in 1995. Q. on? A. Well, there is a particular schedule attached to the It is referred to as Schedule 1.1-B and it is It lists assets which are Copyrights are expressly What portion of the A.P.A. did you base that conclusion

agreement.

entitled excluded assets. excluded from the transfer.

excluded from the transfer of the assets pursuant to that schedule. Q. Did you learn on or about early March of 2003 about a

lawsuit that SCO filed against Internal Business Machines or I.B.M.? A. Q. A. I did. How did you become aware of that? I became aware of it through the press and on the web.

It was a significant development in the industry, the fact

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that SCO was choosing to sue I.B.M., and there was publicity about that. Q. A. Was there significant publicity about it? Yes, there was significant publicity about it. It was There

well reported and well known throughout the industry.

was a lot of commentary about it and a lot of attention paid to it. Q. Did that lawsuit combined with the other information

that you had about SCOsource at that point, did that give you any concern regarding Novell's business interests? A. Yes, it did. It suggested to us in the strongest form

possible that SCO was serious about promoting its campaign against Linux, and that this was the first official salvo that it was going to launch against the Linux community. That really concerned us because of what I have said, our ongoing and continuing interest in the Linux business for ourselves. We were concerned about our own business

prospects as a result of all of this. Q. After the lawsuit against I.B.M., did you receive

communication from someone representing I.B.M.? A. Q. A. Yes, I did. Can you explain that to the jury? Yes. I don't recall the exact date, but it was within

a matter of days after the lawsuit against I.B.M. was filed, that I received a call from a gentleman named Mr. David

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Marriott that was outside counsel for I.B.M.

He called me.

I remember I took the call at home on my cell phone at the end of the day. aware of the lawsuit. He called me and asked me if I was I told him that I was. And whether

or not I was aware that Novell had certain rights under the asset purchase agreement that could be beneficial to I.B.M.? I told him that, you know, we were really just beginning to get into our analysis of the asset purchase agreement, and that I would take a look at it carefully and make our own judgment about the effect of this language that he was referring me to, and make our own independent judgment about it. Q. Did you make any promises to Mr. Marriott about what

Novell may or may not do? A. Q. No, I did not. Did he make any demands of Novell in terms of what they

should or should not do? A. Q. A. No, he did not. About how long did this conversation last? No more than five minutes. It was less than five

minutes to my recollection. Q. All right. At some point did you yourself have a

direct conversation with Mr. McBride on this issue of copyright ownership? A. Yes. I was a participant in a telephone conversation

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between Mr. Stone and Mr. McBride. Q. Let's set the stage for the jurors. Where were you and Mr. Stone? A. Q. A. I was in Mr. Stone's office. Do you recall approximately when this was? My recollection is that it was in the mid May time

frame. Q. A. Do you recall who called whom? My recollection is that Mr. Stone placed that call, but

that he was returning a call from Mr. McBride to Mr. Stone. Q. A. Were you able to hear that conversation? Yes. I was on the speakerphone, and Mr. Stone told Mr.

McBride that I was in the room. Q. A. Q. A. Do you recall the substance of the conversation? I do. What was that? Well, it was essentially Mr. McBride reiterating what

had now been repeated requests to Novell to have an amendment to the asset purchase agreement so that SCO could get the copyrights. Q. What was the response from either yourself or

Mr. Stone? A. It was Mr. Stone who responded, and he told Mr. McBride

that Novell had no interest in transferring those copyrights to SCO, that by this time we had a firm view that those

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copyrights were owned by Novell, and that we had no interest in participating in his SCOsource license campaign against Linux end users. Q. At this point in time, the mid May time frame, had you

or to your knowledge anyone else seen an executed copy of amendment number two to the asset purchase agreement? A. Q. A. No. Had you seen an unexecuted copy? I may have seen an unexecuted copy of amendment number

two by that time. Q. A. Do you recall under what circumstances? Yes. I think it was Mr. Jones who advised me around

that time that we had located an unexecuted copy of a document that was entitled amendment number two, asset purchase agreement. Q. What was your reaction to seeing the unexecuted

amendment? A. My reaction was first and principally that I thought

this document had no legal effect because it was not executed. I read it. It was interesting what it said, but

I concluded that it had no legal effect and pretty much dismissed it. I have been involved in enough transactions

over the course of my career to know that drafts of documents are made with regularity, and more often than not they are not executed. I saw it as a document that had no

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legal effect on the question at issue. Q. Did you give any instructions to anyone in your legal

team about making efforts to see if there was an executed version of it? A. I did. I recall sometime around then asking Mr.

Lundberg, who was a lawyer who worked for me at the time, to look, to conduct -- you know, I think I said to him words to the effect, Jim, turn the company upside down because if there is an executed copy of amendment number two in Novell's files, that is something that would be relevant and we would like to know about that. Jim told me that he had done that and reported back sometime later that, you know, we have sent people off site and looked through various files within the law department and, you know, despite these efforts we could not find an executed copy of amendment number two in the company's files. Q. Let me show you another document that was been admitted

as H-14. If you could take a look at that. A. Q. A. Q. A. Okay. Do you recognize that document? I do. What is it? It is a letter dated May 12, 2003 to Mr. Messman, the

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C.E.O. of Novell, from Mr. McBride.

I came to understand

that the exact version of this letter had also been sent to some 1,500 companies in the United States. Q. A. Q. In mid May, the same date? I believe it was the same date. What was the reaction in the software community when

this letter went to Mr. Messman as well as thousands of letters, to 1,500 other companies? A. It was -- the attitude was game on here, I guess. Mr.

McBride has decided to assert, we believe incorrectly, ownership of the UNIX copyrights against hundreds of companies including Novell, and is seeking to enforce what he believed to be were his company's rights with respect to the ownership of the UNIX copyrights against Linux end users. So the reaction in our company was profound, and the reaction throughout the computing industry was like nothing I had seen in the time that I was at Novell working in the computing industry. There was a lot of commentary on it and

a lot of information around the web with respect to what Mr. McBride was up to. It was quite concerning I would say

to most companies and most people knowledgeable and involved in the industry. Q. Did Novell make a decision sometime after May 12th and

after Mr. Messman received this letter that it needed to

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respond? A. Q. A. Yes, we did. Was that response to be public? Well, after we received this letter, as you might

imagine, I got together with my colleagues and we began thinking about what an appropriate response would be, and whether the response should be private or public. We

concluded after some thought and deliberation that we finally had to make the public aware of our position on this very important issue, because Mr. McBride's campaign against Linux was in fill swing about this point. To my knowledge Novell had made no public comment at all at this point in time. That is my recollection. We

thought, given the full force of the campaign that had been launched, and now that this May 12th letter, which made some demands on Linux end users and some allegations that we thought were unfounded and inappropriate to make, we felt it was important to respond specifically and substantively to Mr. McBride's letter and to make that document public as well. Q. A. What form was the response to take? In the form of a letter to Mr. McBride and in the form

of a press release publishing in effect the letter to the public. Q. Who was tasked with overseeing the preparation of both

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the letter back to Mr. McBride and the press release? A. Q. A. Q. I was. Did you do that? I did. Was there a date selected that this letter was to go

back to Mr. McBride and the press release was to be released? A. Q. A. No. Did you subsequently select a date? I didn't select a date, per se, but the letter went out

on May the 28th. Q. A. Why was it that the letter went out on May the 28th? Because that is when it was ready to go and all were

comfortable with the letter itself and the position that we had taken, and it was ready to go on that day. Q. Was the letter sent on May 28th in order to somehow

impact an earnings announcement that SCO had on that same day? A. Q. A. Q. No. Are you certain of that? Yes, I am. Did you even know that SCO had an earning announcement

on May the 28th before the letter went out and the press release went out? A. I did not.

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Q.

What was the reason for putting out the letter and Was it done in order to somehow

responding to Mr. McBride?

injure SCO or Mr. McBride, or was it done to protect Novell's interests? A. It was totally motivated to protect Novell's interests.

I have explained to you a little bit about our initiative into this business, this Linux business. As you can

imagine, for a company that was preparing to devote a lot of resources and spend a lot of money getting into the business, this campaign of SCO's and Mr. McBride's really had the potential to disrupt all of that. With due respect, I had no opinion and I had really no care, per se, with respect to Mr. McBride or Mr. McBride's business. I was concerned about Novell's business and

Novell's business interests. Q. Let me show you what we have marked as K-15 and J-15. THE COURT: Mr. Acker, you realize that none of

these exhibits have been admitted? MR. ACKER: I realize that, Your Honor. Many of

these have already been admitted through other witnesses, Your Honor. BY MR. ACKER Q. A. Q. Do you recognize those two documents, sir? Yes, I do. Can you tell the ladies and gentlemen of the jury what

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each is? A. Document J-15 is the letter that we have just been

talking about, Mr. Messman's response to Mr. McBride's May 12th letter. As you can see, it is dated May 28th.

Document K-15 is the press release that Novell issued that day announcing that we had sent this letter to Mr. McBride and quoting relevant portions of the letter, and then attaching the letter itself to the press release. MR. ACKER: and K-15. MR. SINGER: These are already in evidence as SCO I would move for the admission of J-15

exhibits, but we have no objection. THE COURT: MR. ACKER: This is a problem, Mr. Acker. I will make this promise to the Court,

that what goes to the jury is only one copy of these, but the witness is testifying as to these, so if we can show these to the jury while he is testifying. THE COURT: J-15 and K-15 will be admitted.

Counsel, I do request, respectfully, that you both make certain that we do not send duplications of the documents to the jury. MR. ACKER: I understand. Thank you.

(Defendant's Exhibits J-15 and K-15 were received into evidence.) BY MR. ACKER

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Q.

Let's take a look at first starting with the press

release which is K-15. MR. ACKER: If we could highlight that, Mr. Lee,

the whole press release. BY MR. ACKER Q. Now, in the first paragraph of that press release,

Mr. LaSala, Novell wrote defending its interests in developing service to operate on the Linux platform, Novell today issued a dual challenge to the SCO Group over its recent statements regarding its UNIX ownership and potential intellectual property right claims over Linux. Do you see that? A. Q. I do. Was that statement true when you made it on May 28th,

that you were putting out this press release in order to defend Novell's interests? A. Q. day? A. Q. Yes, I do. Is there anything that has happened in the almost seven Absolutely. Do you believe that statement still to be true to this

years since this press release came out that would make you think that anything different, other than this press release put out, in order to defend Novell's interest? A. No, nothing has subsequently happened that has changed

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my view on that. Q. Then in this next paragraph down, and we can highlight

that, first, Novell challenged SCO's assertion that it owns the copyrights and patents to the UNIX System V, pointing out that the asset purchase agreement entered into between Novell and SCO in 1995 did not transfer those rights to SCO. Did you believe that to be the case when this went out on May the 28th? A. Q. A. Q. Yes, I did. Do you still believe that to be the case today? Yes, I do. Then you also indicate, second, Novell sought from SCO

facts to back up its assertion that certain UNIX System V code has been copied into Linux. Novell communicated these

concerns to SCO via letter, text below, from Novell, chairman and C.E.O., Jack Messman, in response to SCO making these claims. Do you see that? A. Q. Yes, I do. Why was it that Novell was putting SCO to its proof,

that is, asking them what in fact was their claim with respect to UNIX and Linux and why were you doing that? MR. SINGER: I object, Your Honor. This was

previously objected to on a privilege. THE COURT: Mr. Acker, I'm going to have to rely

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on the representation. MR. ACKER: MR. SINGER: BY MR. ACKER Q. Let me ask you this question. Was your request of SCO I will move on. I can show you the precise cite.

that it actually put forth proof to support its claim, was that done in an attempt to somehow harm SCO? A. Q. Not at all, no. Then you attached to this press release the actual

letter that Mr. Messman sent back to Mr. McBride on the same day which has been admitted into evidence, correct? A. Q. Yes. Did anyone at I.B.M. tell you, or to your knowledge

anyone else at Novell, that it should put out this press release on May the 28th? A. Q. No. To your knowledge did I.B.M. exert any influence that

resulted in the press release on May 28, 2003? A. Q. No, none whatsoever. Did you put out this press release on May the 28th in

order to protect Novell's interests or some other company's interests? A. Q. Totally to protect Novell's business interests. Would you believe that you would have been doing your

job as general counsel of the company if you had not

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responded to Mr. McBride's activities up to the middle of May of -A. No. I felt it was imperative upon us to respond in a

formal and public and forceful way to Mr. McBride's May 12th letter. Q. At some point after the press release went out on May

the 28th, did you become aware that there was in fact an executed copy of amendment number two to the asset purchase agreement? A. Q. A. I did. How did that happen? My recollection is that on the evening of June the 5th

that Mr. Messman advised me that he had had a conversation with Mr. McBride, and that Mr. McBride told him that SCO had identified a copy of an executed version of amendment number two, and that he, Mr. McBride, would be faxing that to us. That is how I found out about it. Q. When did you actually see the document? Was it that

night or the next day? A. It would have been the evening of June the 5th. I

can't remember the exact time. Q. Then did you subsequently receive that morning of June

6th, receive a letter from Mr. McBride? A. Q. We did. Let me show you what we have marked as Z-15.

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Do you recognize that? I do. What is that? This is a letter from Mr. McBride to Mr. Messman dated

June the 6th, 2003, that Mr. Messman received, my recollection is, the morning of June the 6th. MR. ACKER: Honor. MR. SINGER: Again, this is already in evidence, I move for the admission of Z-15, Your

but we have no objection. THE COURT: Z-15 will be admitted.

(Defendant's Exhibit Z-15 was received into evidence.) BY MR. ACKER Q. In this letter did Mr. McBride make demands of Mr.

Messman and Novell? A. Yes, he made numerous demands, outlined principally in

the second half of the letter. Q. If we could scroll down, you are referring to the

numbered bullet points? A. The paragraph that is prior to the numbered bullet

points, as well as to the numbered bullet points. Q. Let me read it first and then you can explain what

impact this had on the company. A. Sure.

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Q.

SCO will hold a press call today at 11:00 a.m. Eastern

Standard Time to clear up the matter so that our shareholders and customers are fully aware of SCO's rights with respect to the UNIX copyrights. You have time before

that call to take the following corrective action in order to possibly mitigate any liability on the part of you, Jack Messman and Novell to SCO, and to your own shareholders for your false and groundless accusations. What was your reaction and what were the allegations that Mr. McBride was making toward Novell in his letter on the morning of June the 6th? A. In the previous portion of the letter Mr. McBride

alleges that our release of the press release on May 28th violated the United States securities laws. As you can

imagine, as the general counsel of the company that type of allegation made against the company that I was the general counsel of was taken quite seriously, because those laws are laws that lawyers and companies spend a lot of time making sure that we comply with. The assertion by Mr. McBride that our company and our C.E.O. were violating U.S. securities laws I thought was outrageous and unsupported by the facts and circumstances. Q. What if any impact did the fact have that Mr. McBride

was going to hold a press conference at 11:00 that day have? A. I felt somewhat -- I guess I would say our company felt

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pressed by Mr. McBride.

He made these demands that are

outlined in the lower half of this letter essentially saying that unless you comply with the demands that I am making of you, and the implication to me, the strong implication was that he would be making references to these allegations about violations of U.S. securities law in his call at 11:00. Q. A. Q. That is how I read this.

Did you decide that you needed to respond? Yes. I decided that I needed to respond very quickly.

What was the nature of your response that you thought

was appropriate? A. I wrote a letter back to Mr. McBride as quickly as I The letter addressed two subjects. One was these

could.

allegations that he had made against our company regarding securities laws violations. The other related to a

commentary on the fact that an executed copy of amendment number two had been found. Q. Let me show you what we have marked as Exhibit Y-15. MR. ACKER: SCO Exhibit Number 97. BY MR. ACKER Q. Take a look at the letter, Mr. LaSala. First let's take a look at your letter on June 6, 2003. You wrote I have received your letter to Jack Messman with respect to Novell's May 28th press release. For your This has been admitted, Your Honor, as

1903

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information, Novell today has issued a press release with respect to amendment number two. your ease of reference. Your letter contains absurd and unfounded accusations against Novell and others, coupled with a veiled threat to publicly state those allegations in a SCO press release call to be held at 11:00 a.m. Eastern Standard Time. What allegations, absurd and unfounded accusations were you referring to in your letter back to Mr. McBride? A. That paragraph -THE COURT: MR. SINGER: Just a moment. Excuse me. This was also a subject A copy is attached for

that was objected to as privileged in his deposition, page 40, line 22. MR. ACKER: This letter was the subject of pages He was asked directly about all of

of deposition testimony.

this in his deposition and gave the answers that he is about to give, Your Honor. THE COURT: Mr. Singer has. MR. ACKER: MR. SINGER: page 41, line 3. MR. ACKER: MR. SINGER: I'm sorry? Page 40, line 1, through page 41, Page and line, please. Page 40, line 1, May of 2007, through Mr. Acker, take a look at what

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line 3. MR. ACKER: of the letter. MR. SINGER: THE COURT: MR. SINGER: It is the June 6 press release. He is asking about the letter. If you're drawing a distinction This has nothing to do with this part

between the letter and the attached press release, and I think the objection was to the press release -MR. ACKER: Well, as to the press release, I know

that there were pages of testimony about the press release, Your Honor. If you're going to make an objection regarding

the press release, we'll have to have a discussion about -THE COURT: about the letter. Go ahead. You asked him a question

Go ahead and ask the question.

Do you want the question reasked, Mr. LaSala? BY MR. ACKER Q. When you were talking in your letter about the absurd

and unfounded accusations, what were you referring to, Mr. LaSala? A. This was a reference to Mr. McBride's allegations that

Mr. Messman, the C.E.O. of Novell, and Novell itself had violated U.S. securities laws. Q. If we could turn to the next page, you also put out a

press release on that day? A. Yes, we did.

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Q. A. Q.

Is that what we're looking at now? Yes. In that press release Novell stated in a May 28th

letter to SCO, Novell challenged SCO's claims to UNIX patent and copyright ownership, and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. Amendment number two to the 1995

SCO-Novell asset purchase agreement was sent to Novell last night by SCO. That was true, correct? A. Q. Yes. That was the first time to your knowledge anyone at

Novell had seen an executed copy of amendment two? A. Q. Yes. To Novell's knowledge this amendment is not present in

Novell's files. Do you see that? A. Q. I do. When this press release went out on June 6, 2003, did

you also believe that statement to be true? A. Q. Yes, I did. Did you later find out that, in fact, there was a copy,

an executed copy of amendment number two at Novell? A. I later found out that there was an executed copy of

amendment number two at Novell.

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Q.

Was that located before or after this press release

went out? A. To the best of my knowledge after this press release

went out. Q. So despite your instructions to your legal team to go

and find it, they were not able to locate it before June 6, 2003? A. Q. That is correct. Then you wrote and the press release states the

amendment appears to support SCO's claims that ownership of certain copyrights for UNIX did transfer to SCO in 1996. Correct? A. Q. A. Yes. That is what the press release says.

What did you mean by that statement? Well, I meant that on first blush, the first reading of

the amendment, a hurried reading of the amendment that the amendment appeared to support claims of transfer of ownership of copyrights. Q. Upon further reflection what was your conclusion about

whether it did or did not? A. Q. My conclusion was that it did not. Why did Novell put this out to the public? Why did

Novell do this? A. Again, I think there were two motivations for Novell The first we

putting this out to the public that morning.

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have talked about, those allegations that Mr. McBride had leveled against us, and we felt it important to respond to him and we did that, so that he would refrain from saying that our company had violated the securities laws on his 11:00 call that morning. Perhaps more importantly with respect to the ownership issue of the copyrights, we were getting -- we, the company, and colleagues of mine in the company were getting calls from the press that morning, asking us for comments on the fact that SCO had found and identified amendment number two, and that SCO was taking the position that amendment number two cleared up the question of ownership of copyrights. Apparently someone had leaked that to the press, and we were getting numerous calls that morning, and we felt compelled to be responsive to those, again, particularly in light of the fact that Mr. McBride had scheduled an 11:00 call that morning. So we wanted to get something out and we

needed to do it quickly. Q. What was the plan in place going forward after the June

6th, 2003 press release to determine the impact, if any, of amendment number two on the asset purchase agreement? A. Well, my colleagues and I set about to best understand

as we could amendment number two in the context of the entirety of the asset purchase agreement. We spent, as you

might imagine, a considerable amount of time working on

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that. Q. Let me show you what has been marked as F-16. Let me

show you F-16, and this has been admitted as SCO exhibit, I believe, 672. Do you recognize that letter? A. Q. Yes, I do. Can you tell the ladies and gentlemen of the jury what

it is? A. Well, this is a letter from me to Mr. McBride dated In it I advise Mr. McBride of what Novell's

June 9th 2003.

rights are under Section 4.16-B of the asset purchase agreement. It was written in furtherance of the letter that In this letter

we had sent to Mr. McBride on May the 28th.

we tell Mr. McBride that we will be, again, pursuant to our rights under the asset purchase agreement, that we will be directing SCO to waive any right that it may claim to terminate an I.B.M. SVRX license. Q. Prior to putting out this letter asking SCO to waive

its claims with respect to SVRX licenses, I.B.M.'s SVRX license, had you had any other conversations with anyone from I.B.M.? A. Yes. To be clear, this letter merely tells SCO that it should waive its claims to terminate I.B.M.'s SVRX licenses. Yes, I did have a conversation with someone at I.B.M. prior

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to this letter going out. Q. A. Do you remember approximately when that was? It would have been between -- I think it was in early

June, between the time of the May 28th letter and the time of this letter. Q. A. Who participated in the call? The participants in the call were myself, Mr. Rosenberg

from I.B.M., I believe at the he time was the general counsel of I.B.M., and Mr. Marriott, who was I.B.M.'s outside counsel, and Mr. Michael Jacobs from Morrison & Forester representing Novell, so the four of us participated in the call. Q. A. What was the substance of the call? The substance of the call, again, was Mr. Marriott

explaining to us his view of how the asset purchase agreement worked, and asking that we consider waiving all claims that SCO had made or might make against I.B.M. with respect to I.B.M.'s SVRX license. Q. A. How did you and your counsel respond? Mr. Jacobs responded on my behalf and he said to the

I.B.M. lawyers that, you know, we are in the process of reviewing these documents. them. We have taken a careful look at

While the request was made that Novell waive all

claims that SCO might make, that we would look at each on a case by case basis and make our own determination and act

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accordingly.

If we felt that the interpretation that I.B.M.

was suggesting was the correct one, that then we would act in that way, and if we felt it was not correct, then we wouldn't. Q. A. Q. A. Q. Was that analysis done? That analysis was done. Did that result in this letter on June 9th? It did. Can you explain to the ladies and gentlemen of the

jury, because it has been a little confusing, exactly what it is that you're asking or directing that SCO do in this letter and what provisions of the A.P.A. you believe gave you, that is Novell, the right to do so? A. We are relying on an important provision of the asset

purchase agreement that reserved to Novell certain rights with respect to existing SVRX licenses. Novell had a We had been

continuing economic interest in those licenses.

told and had learned that SCO had put I.B.M. on notice that it, SCO, was going to terminate that license because of the assertion that it, SCO, was the owner of the copyrights. Now, Novell had realized substantial economic benefit from this license that we had entered into with I.B.M. in the mid nineties, is my recollection, and we had been paid about $10 million by I.B.M. for a fully paid up irrevocable perpetual license, and --

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Q.

Let me stop you there.

When you use those words, fully

paid up irrevocable license, what does that mean to you? A. It means they got a license to SVRX code forever, and

that they would owe us no further money, that it was paid up, fully paid up at that time, and that the license could not be revoked by Novell. Q. What was your understanding of what SCO was attempting

to do in this time frame? A. SCO, my understanding is, put I.B.M. on notice that it,

SCO, was telling I.B.M. that it planned to terminate that license, and to do so by a date certain, which I believe was June the 13th of 2003. Q. What if any impact did you believe that that step, the

termination of the I.B.M. license, would have on Novell's business interests? A. Well, that act by SCO could have significant negative As I said, I.B.M. had paid Novell

implications for Novell. about $10 million.

If I.B.M. was going to have its license

revoked by SCO, then it was conceivable that I.B.M. might seek to recoup its payment to us, the $10 million that it had paid us for its irrevocable license. to us. Q. Why is it that you made the decision to direct SCO to That was a concern

waive and not terminate the I.B.M. license? A. Well, we have that right under 4.16-B of the asset

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purchase agreement, that is the rights related to existing SVRX licenses at the time of that agreement, and we controlled and retained the right to direct SCO to waive any claim that it might make against any of those licensees. trust you can understand why we would do that, because we had an economic interest in those licenses, and if SCO was going to seek an amendment or a waiver or a revocation of licenses, it was in our interest to be sure that they couldn't do that and that they didn't do that. This was something upon my reading of the contract that strongly indicated that the parties had thought that through and had arranged the contract that way for that purpose. Q. Was this done, this asking of SCO to waive its claim I

against I.B.M. or to not terminate its license, was that done in order to harm SCO or just to protect Novell's business interests? A. No. Again, we had no interest in harming SCO. We were

looking out for Novell's business interests.

In this case

there was at least $10 million at stake, and I could imagine a claim coming to Novell seeking not only $10 million, but $10 million plus, you know, ten year's of interest. was a concern. Q. Let me show you another letter that you wrote on June This

26, 2003. A. June 24th?

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Q.

I'm sorry.

June 24th, yes. What is this marked as? S-16. Has a version of this already been

THE COURT: MR. ACKER: THE COURT: admitted? MR. ACKER: MR. SINGER:

I don't believe so, Your Honor. We are not certain that this has We do not have an objection.

previously been admitted. MR. ACKER: Honor. THE COURT:

I move the admission of S-16. Your

S-16 will be admitted.

(Defendant's Exhibit S-16 was. received into evidence.) BY MR. ACKER Q. On June 24th you wrote another letter to Mr. McBride,

correct, Mr. LaSala? A. Q. I did. Can you sum up for the ladies and gentlemen of the jury

what you're asking from SCO in this letter written on June 24, 2003? A. Well, essentially we're asking SCO for copies of the

SVRX licenses that it announced to the public that it had entered into with third parties. Q. If we could go down to the paragraph that begins with

amendment number two --

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A. Q.

Yes. You wrote, amendment number two to the asset purchase

agreement reinforces the restrictions on SCO providing that Novell, as well as SCO, has the right to approve any transaction with an SVRX licensee which concerns a buy out of any such licensee's royalty obligation. Do you see that? A. Q. I do. What is it that you're asking for from SCO? In this

letter, simply put, what were you asking him? A. Copies of recent licenses that they had entered into

with Microsoft and another at that point unnamed party, because we felt that we had an economic interest in those licenses. Q. Why did you think you had an economic interest? MR. SINGER: I object, Your Honor. I don't think

these are issues that are before us in this case. THE COURT: BY MR. ACKER Q. A. Why did you make this simple request of SCO? Because consistent with our rights in this Section I'll overrule the objection.

4.16-B that we have been talking about, SCO did not have the right to enter into new SVRX licenses, except in some limited circumstances. We learned from their securities

filings that they had in fact entered into new SVRX

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licenses.

We thought that to the extent that they had done

so, that we might have an economic interest in whatever license arrangement they had made. Q. How would that economic interest -- where would that

come from? A. It would come from royalties that these parties would

pay under the license to SCO, and arguably we thought rightfully would belong to us. Q. Why is it that Novell would be entitled to royalties

that had been paid to SCO? A. Because SCO didn't have the authority to enter into

these new SVRX license, and to the extent that they had done so our view was that, you know, those proceeds from those SVRX licenses belong to us because of our ownership position with respect to the copyrights. Q. Was that part of the -MR. SINGER: THE COURT: Your Honor, may we approach? Yes.

(WHEREUPON, a bench conference was begun.) MR. SINGER: Your Honor, we filed a motion in

limine that dealt with the fact that the determination of these licenses and the 2.5 million to Novell -- in other words, all events relating to the 2008 trial shouldn't come in here and that motion in limine was granted, if I recall. That is exactly the line of questioning that Mr. Acker is

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getting into, the interpretation and whether the Microsoft and Sun agreement or SVRX licenses and royalties. doesn't bear on copyright and ownership issues. right into the areas which this Court -MR. ACKER: There is a claim for specific This It goes

performance and we have a defense to that claim for specific performance and material breach of the A.P.A. Court issues that the Court is to decide. Those are

We attempted to

not have those come in front of the jury and be issues and SCO didn't want to. the jury. They wanted all this to come in before

That is why Mr. LaSala is here and this is the

testimony that we're providing. THE COURT: hands? MR. ACKER: And it goes to the issue of a material Does this go to the issue of unclean

breach and preventing them from moving forward on this specific -- both issues. MR. SINGER: We had also filed, and I believe the

Court ruled in our favor, that there was nothing here -- a breach by virtue of this provision that would affect our rights with regard to copyright ownership, and there were motions in limine that were argued and the Court ruled on this subject, and the mere fact that he is asserting that this relates specifically to performance does not create a predicate for getting in or bringing in that part of the

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case that was already decided and adjudicated now into this proceeding. They argued that we couldn't raise issues here that we had breached, and the Court said, no, it did not find that our failure to pay over those royalties constituted a basis to relieve them from their obligations that are at issue in this case, and -MR. ACKER: If we can have a stipulation that Mr.

LaSala's testimony and the other witness's testimony on this issue from the bench trial would be admissible here for the issues that the Court is to decide, I'll move on to another issue. THE COURT: MR. ACKER: Say that again. If we can have a stipulation that the

testimony from the bench trial from Mr. LaSala and other witnesses on these issues, that is like Sun and Microsoft, the licenses, and the failure of SCO to provide those licenses to Novell when requested in 2003, then if they'll agree that the Court can consider that and decide those issues, then I don't need to go into it with Mr. LaSala. MR. SINGER: We'll agree that you may consider it

in that fashion on those issues. THE COURT: By way of reference to those parts of

the transcript in your proposed findings of fact and conclusions of law?

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MR. SINGER: MR. ACKER: THE COURT: MR. SINGER:

Yes. Yes. That is what we'll do. So no further discussion of these

subjects with Mr. LaSala or other witnesses? MR. ACKER: MR. SINGER: Not in front of the jury. Okay.

(WHEREUPON, the bench conference was concluded.) BY MR. ACKER Q. Let me show you another letter, sir, T-16, which has

been admitted as SCO 678. Do you recognize that letter? I do. If we could highlight the first paragraph. On June 26th you wrote to Mr. McBride, Mr. LaSala, and you write to address SCO's recent statements to the press and securities filing in your amended complaint in the I.B.M. case and other materials, that SCO owns all of the intellectual property rights associated with UNIX and UnixWare. For example, your June 6th press release states

that SCO owns all rights to the UNIX and UnixWare technology, and the description of your SCOsource program on your web site states that SCO owns the patents and copyrights and core technology associated with the UNIX system.

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Go to the next paragraph.

Then you write very clearly,

SCO's statements are simply wrong. Do you see that? Yes. Now, why is it on June 26, 2003 that in this letter to

Mr. McBride that you're referencing the public statements since June 6th, and you're telling him his statements are wrong. Why do you do that? Well, it had become a bit of a practice of ours to try

to rebut at every opportunity that we could every misstatement that Mr. McBride made, public misstatements that Mr. McBride made about the ownership issue. tell you that it was a challenge to keep up. I must

I'm sure that

we missed some occasions, but in this instance we were writing in furtherance of the June 6th letter, and we were doing so in response to continued public statements being made by SCO that it was the rightful owner of the copyrights. private way. I would remind you that we were doing this in a We were sending private letters back to him

and he was making public statements. Q. Why did you feel it was necessary to tell Mr. McBride

privately that his statements about ownership were wrong? A. Well, we wanted it to be clear to Mr. McBride that he

should not be relying on anything that we had previously

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said with respect to the ownership of the copyrights in a way that would permit him to make -- continue to make assertions that SCO was the owner of the copyrights. is what this letter did. It was, again, to put Mr. McBride on notice that we believed strongly that we were the rightful owners and that they were not, and that to the extent that they may have been relying on something that we had previously said on June the 6th, that they should not so rely on that. clear, we believed that their statements were wrong. Q. In telling Mr. McBride on June 26th in a private letter To be That

that you thought that he was wrong about ownership, were you intending somehow to harm SCO? A. No. Again, we had no interest in harming SCO. Our

desire was to look out for Novell's business interests, and this certainly -- this correspondence was certainly in furtherance of that. Q. I'm going to show you what we have marked as D-18. MR. ACKER: 105, Your Honor. BY MR. ACKER Q. A. Q. Do you recognize that letter, sir? Yes, I do. Is this a letter that you wrote to Mr. McBride on This has been admitted as SCO Exhibit

August 4, 2003?

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