Day 4 of the Trial in SCO v. Novell - Novell's Petition for Certiorari - Updated 5Xs

Day 4 of the Trial in SCO v. Novell - Novell's Petition for Certiorari - Updated 5Xs - Messman, Levine, Mohan, Michaels, Wilt

Reporter
Groklaw

March 11 2010

I arrived a little late, about 8:35. Court was already in session. I noted it was not as 'grand' a court as Judge Kimball had. However the jury had not been seated. There was some discussion regarding SCO's expert, Mr. Davis. They said (if I understood correctly), he will not testify (or perhaps it was today). Stewart mentioned that he was elderly and one of SCO's attorneys said he was not in good health.

[For future reference my observations will be in brackets]

Toward the end of my being there, they talked about having a 'live' witness to fill the balance of the day (that could have been Davis - I don't know). The jury came in and they began video depositions (Messman deposition was first, although they said he would also be a 'live' witness [I couldn't understand why they had the video deposition if he testifies later, but, then IANAL]. He recited his history and how he came to Novell. He said he hired Ray Noorda. Later he discussed a merger and said that he was a Board member when the Novell -> SCO sale happened - the Board approved.

[I noted that at this time Messman sat with crossed arms - did not look happy] They discussed the APA Amendment 2. Established that Novell found it in their Finanace Department. He said that no one knew they had a signed copy.

SCO offered Exhibit SCO-1 into evidence - Objection [While they discussed the point I noted there seemed to be more attorneys than either jury members or gallery]. SCO-1 was approved and entered. Singer then read from Section A [I am not attempting to describe or recreate any documents]. They then continued with Messman deposition. Listed 'excluded assets'. Singer put before jury 28 May 2003 letter [I believe exhibit 94] and asked they "publish to jury" - No objection. Directed him to page 2 last paragraph. Messman sent Darl a letter. Singer asked if he approved it - Yes.

He said that SCO did not own the copyrights, and he did not investigate SCO's claim. I'll send more later.

Here is the rest, oh and I talked with a CS student taking a law class - he said he would submit a report as well.

[Picking up:] Backing up a few lines, Messman said that Section A excluded assets. He indicated that SCO didn't own copyrights. He indicated that he didn't talk about intent: only the document. He did not investigate claims [up to that time].

Singer entered Exhibit 525 into evidence (a press release). No Objection. It was the 28 May 2003 press release. The release challenged SCO's claims. Messman: used PR to get (Novell's) message out. Singer asked if PR caused a 30% decline in SCO stock – Messman: Cannot (Did not) recall any given day's stock change.

Singer entered SCO-96 (a letter) into evidence. No Objection. It was a Joseph LaSala letter 6 Jun 2003 – the same day Novell issued the press release. Video deposition continued: Did Messman approve LaSella letter: Yes, and sent it to Darl. Entered SCO-105: 4 AUG 2003 letter (or press release). No Objection – Singer read the whole exhibit. Messman deposition continued.

Messman said that Novell sold so that oldSCO could continue development and unify Unix. They didn't need copyrights to do that. Entered SCO-133 (Wall Street Article) 20 Sep 1995. Asked if he read the article, and he replied that he may have – yes.

Asked if he challenged Journal article he replied “I don't know of any steps” (to correct article). Asked if he saw the Chris Sontag to Greg Jones letter, he replied No. Something about 'all rights title and interest in copyrights' in letter, and he said he just became aware of the letter (at deposition time).

He retired 21 Jun 2006. Is he a stockholder? Yes. He indicated that Novell began a Linux strategy late 2002. NetWare was to run on top of Linux – Novell was not engaged in Linux distribution.

Something was said about Novell's relationship with IBM, and how IBM, HP, and Dell would sell it (NetWare on Linux). Did IBM pay Novell $50M? Messman said that IBM investment was to give him some comfort that IBM would support the product. Novell had $750M in bank and purchase was $120M, so Novell could afford it without the $50M. He called IBM to see if they would sell the product and buy stock. Discussion took place 2003.

Messman contends that copyrights did not transfer from APA (in fact, copyrights and patents both did not transfer), according to David Bradford, General Counsel at the 1995 Board Meeting. They were selling (to Santa Cruz) certain AT&T assets, not selling copyrights and patents. Amendment 2. Messman said that SCO did not need copyrights to do what they wanted to do.

Exhibit 1021 (faxed letter - if I recall, from SCO to Novell). I can't read some notes, but Messman began an investigation after receiving this letter. Asked why Novell published (the press release), Messman said the stock market was in a 'feeding frenzy'. Asked if he wanted to dampen newSCO's price, he indicated that he had no opinion as to what releasing PR would do. He did not personally participate in investigation.

Novell asked SCO to identify infringing code. It would be a tremendous effort to verify SCO's claims without their identifying code.

Asked if Darl asked Novell to admit SCO owned copyrights, he said No. Asked if he talked to IBM about copyrights, he said No. Asked if he talked to IBM about Linux, he said No. Some discussion regarding an unsigned Amendment 2 copy. Messman said that Amendment 2 appeared to support SCO's claims that copyrights transferred. Only limited rights transferred. Novell sold code to evolve and unify Unix – SCO didn't need copyrights to do that.

SCO bought right to develop code to unify Linux and Unix and to compete with NT. (End Messman Deposition)

Next was Jim Wilts Deposition: 26 Jan 2007. VP business development, Sr. VP products, President Consultation Services. Had limited discussions with Caldera/SCO. [It was somewhat confusing not knowing what depositions were scheduled and if we were talking oldSCO or newSCO] He just assumed that copyrights transferred, As one would assume if you “go out the door, your head goes with you.” Didn't recall specifically saying copyrights were included or not. He indicated that they wouldn't buy the 'business' if copyrights did not transfer. Discussed that they couldn't afford outright purchase – and the royalty payments went to purchase price, they retained 5% to cover their collection costs.

Jury left.

SCO prosented a structural foundation to support Mohan deposition. Novell: squarely on motion in limine. Stewart said Davis is uniquely qualified; no decision. Stewart to rule after recess.

RECESS

Attorneys held discussions during Recess. [Spent some time in hallway and noted Normand walking its length in thought – I guess rehearsing what he would say – he primarlily handled matters following recess] Stewart returned and ruled that SCO video deposition for (didn't catch the name) was not allowed.

Mohan deposition: 23 Feb 2007:

Mohan -- was Santa Cruz Organization's CEO at time. Engaged in 'high level' discussions, not details; reviewed did not author writings; had some discussions with Duff Thompson and Frankenberg. He looked at APA but did not participate in strategy; he signed APA. He reviewed details – Yes, he read it. Did he read it cover to cover? Yes. He believed it complete – nothing jumped out as unclear.

Could they sell UnixWare: absolutely. He was on SCO Board when they agreed to sell to Caldera: the whole business, but could not afford “UnixWare income stream”. Asked what assets Novell retained, he said that oldSCO “bought business”. Novell wanted to protect its 'income stream'; bought whole business. Copyrights included: absolutely. Asked if copyrights were included in documents; he was not aware. Didn't list one item as a time: bought whole business: “to me, business includes copyrights”. Looked at the entirety (Frankenberg and Thompson). “Business included all the assets, and that includes copyrights”. That was value of what they were buying. Less value to SCO if copyrights did not transfer.

Entered 526 1995 Press Release (10/28) Mohan – did anyone from Novell say they retained copyrights: “I thought we bought the business”.

Attorney (don't remember which side) requested sidebar: Stewart came down from bench and they met in northwest corner, white sound – rather unpleasant, louder than I thought necessary.

Exhibit 180 allowed, 18 Apr 1996: Frankenberg to Mohan; Novell did not grant IBM additional rights, no right to sub-license was granted, except to make small changes or corrections. Asked if both sides were well represented, he responded affirmitively. Asked if it was an arms-length transaction, he said Yes. Did either side have an unfair advantage, he thought they were equal.

Asked if the contract was the most important thing, he said Yes. In a dispute, he was asked, should you look to the contract? Yes; even if the disput is many years down the road? Yes. APA gave right to business. Asked if a contractural provision (should prevail), he didn't answer directly. Normand stopped video – asked for a sidebar: granted.

[I noted that Hatch sat at the far left of table – seemed to be uninvolved with the other attorneys – as if sitting there by himself – there are 13 jurors: 6 women and 7 men; mostly younger I identified two I would classify as middle-age or older.]

(Some time after sidebar, Stewart called an in-court recess: more white sound. Afterward Stewart asked if jury could hear what was said or if they could read lips – satisfied that they could/did not, he continued).

Video continued: Novell retains certain (assets) → does not agree with APA 1.1a -- believed they bought entire business. Proxy Statement (sent to SCO investors.

Entered NOV-J-10 (pgs 132-133) (Jacobs did not read the document as Singer had, said that he thought jurors could read faster). Mohan asked to read 132-133: Section regarding 'Intellectual Property' Mohan could not identify word: Copyright. Novell didn't tell me they kept it (copyrights), did not tell me they gave it.

Michaels Depostion: 28 Mar 2007

[At this point, I misread the clock and left for my appointment – when I reached the exit I saw that it was 11:30, not 12:30 so I went back.]

Michaels said they bought the whole business, that it was purely a financial transaction. They only wanted SCO to talk to their customers, they didn't want Novell talking to them. (Apparently, there was a time when Novell talked to a customer): “I'm talking about their actions, not their words”.

[He was very arrogant, dismissive, superior, and did not well tolerate the examaination]

He didn't review drafts, only 'Term sheets” which were in English – not legalese. Asked if he was involved with Term Sheets, he said Yes. They intended buying business begun at AT&T, through Novell, and licensed (something) back to Novell.

What copyrights did that include: [he was not as glib answering this question]. He basically said 'we bought the business, we were in the intellectual property business' [I wondered how they continued in business if the copyrights were in question] He had no idea what people said ten years ago.

Stewart called a 20-minute recess – since I needed to leave I left at this point because I would only get about another ten minutes, before I had to leave.

[I was struck that SCO talked about people's memories, what they thought (albeit some time later) was transferred, but have no documentation for those transferred assets: copyrights. Their documentation is comprised of press releases, newspaper articles (we all know how reliable they are), and letters. OldSCO seemed to be a 'fly by the seat of the pants' operation, since they could not produce any documented evidence, unless there is some other explanation. I hope the jury sees that as well.]

08:11 PM EST