Week 2, Day 9 of SCO v. Novell Trial - Jury Hears About Kimball's Rulings and Botosan - Updated Again

Chris Brown

March 18 2010

Novell's attorney Sterling Brennan read before the jury the portion of Judge Kimball's 2004 ruling stating that it is uncontestesd that the APA did not transfer the copyrights to SCO.

He provided a summary of Judge Kimball's 2007 ruling that the APA, A1, and A2 did not transfer the copyrights to SCO.

This was anticipated during considerable pre-jury discussions this morning that he may do so, but they were certainly dramatic moments when each where brought before the jury.

I thought Judge Ted Stewart's numerous (perhaps 3 or 4) disclaimers and instructions to the jury were handled very well and not nearly as prejudicial as had been foreshadowed the last few days.

I'm sure it will have a powerful influence on the jury.

Judge Stewart instructed the jury that, among other things, they must not base their decisions on that wording, that it was reversed on appeal and was sent here for them to decide. He told the jury that Mr. Brennan is using it here solely to counter the testimony of the witness (Dr. Botosan).

Most of the day, up to the 11:55am break was Novell's cross-examination of Dr. Christine Botosan and SCO's redirect and significant motions and rulings regarding same.

Before the jury was brought in, Judge Stewart observed that someone must be very tired as the Jury Instructions were filed at 4am. Having reviewed them he asks if the parties are abandoning the Litigation Privilege? Mr. Normand said that was their understanding but that it was [Novell] who was asserting it. Novell's Mr. Jacobs said that he's not sure if something in the wee hours changed, but that he will look into it and find out if that's the case.

Judge Stewart addressed the motion filed late last night regarding admittance of prior court rulings. SCO's Mr. Singer was quick to state that they do not believe they have opened any doors. He stated that they operated in a "but for" world where we have the copyrights, where there was no slander. That without the slander there was no litigation, therefore no rulings, etc.

Novell's Mr. Sterling Brennan asserted that saying this is a "but for" world is a mischaracterization. He said the entire foundation of Dr. Botosan's report is based on analysts' projections based on the "real world." He said that there are people in the real world who rejected licenses based on real world court rulings. He stated it's not fair to Novell to defend against the, potentially, $250 million slander of title claims. He said Dr. Botosan stated in her testimony that she used the summary judgment motions in developing her report.

Judge Stewart said he's going to grant Novell's request. And that should the rulings be mentioned he will read the following instructions to the Jury... "You have heard references to court cases... district court reversed the decisions in this case... and that is why you are here, to decide..." He said his ruling is limited to the two judgments in 2004 and 2007.

SCO's Mr. Brent Hatch asked about Novell's additional exhibits request sent overnight. He said Novell has known about the reports for some time. Mr. Brennan starts saying there are two species of exhibits, the first are SCO SEC 8K filings. Judge Stewart interrupted him and, I believe, denied Novell's request.

The Jury enters and Dr. Botosan takes the witness seat.

Novell's Mr. Sterling Brennan asks, When did SCO's attorneys first approach you?

Botosan: 2007.

Q: What is your hourly rate?

Botosan: $450/hour, it may seem high, but I want to describe to the jury the reason... Judge Stewart cuts her off and directs her to only answer Mr. Brennan's questions, that her lawyer can elicit more.

Mr. Brennan: Substantially more than UofU?

Botosan: Yes, but it's comparable to my consulting work.

Q: How many hours have you worked on this since 2007?

Botosan: About 4 weeks.

Q: And that's 40 hours per week?

Botosan: No, I wish. Closer to 50.

Q: So 200?

Botosan: Correct.

Q: So just under $100,000?

Botosan: Yes.

Q: When you started were you given instructions?

Botosan: Yes, "but for."

Q: Were you given assumptions?

Botosan: Yes, 1) Novell slandered.... (missed the rest)

Q: SCO's attorneys asked you to follow instructions and put it in a report?

Botosan: No, that's not correct...

Mr. Brennan produces her May 23, 2007 report and asks, SCO's attorneys provided her with documents?

Botosan: Yes, access to database of case documents.

Q: And that included all rulings in this case?

Botosan: I assume so.

Q: Did you read any?

Botosan: Yes.

Mr. Brennan reads from the report SCO's instructions: "...The APA and Bill of sale transferred the entire business and APA confirmed transfer to SCO..," is that correct?

Botosan: Yes

Q: The Instructions based (page 1, paragraph 1) on Novell's public statements?

Botosan: Yes, based damages on Novell's statements.

Q: SCO gave you the measure of damages?

With qualifications she agrees.

Q: If the instructions SCO gave you were inaccurate, the damages would be different?

She agrees, but this came after a long time of Mr. Brennan questioning the scenario of if SCO did not own the copyrights, there would be no damages.

Q: Your report contains information not presented in court yesterday?

Mr. Hatch objects and is sustained. (Much later in the day the judge and Mr. Brennan discussed where this question was going. Judge Stewart opined that had Mr. Brennan gone further along this line of questioning toward the prior court rulings he would have entertained SCO's objections. Mr. Brennan notes that Judge Stewart had done so. Mr. Brennan said he wasn't going to go there and that was as far as he was going to go on that question.)

Mr. Brennan turns to board (summary board) from her previous day's testimony and asks Dr. Botosan what would the calculation be if the copyrights did not transfer? She responds, but if that's true we wouldn't be sitting here. On further prompting she states that there would be no product, there would be no damages. She states, but that's not the world we live in.

Mr. Brennan asks further, So what would you calculate the damages to be?

She eventually responds, $0. Mr. Brennan asks her to write that on the board, She then writes $0 down at the bottom.

Mr. Brennan thanks her and says, That's all the calculations I need.

He then asks her of her specialities. She replies to the effect, financial reporting, financial report analysis...

Mr. Brennan asks, You relied on two sorts of documents -- stock trader analysis and internal forecasts?

Botosan: Yes, they were a small subset of the documents I used.

Q: Do you understand SEC filings, 10Ks, 10Qs?

Botosan: Yes.

Q: And event 8Ks?

Botosan: Yes (but not as well).

Q: Did you examine SCO's filings?

Botosan: Yes, the 10Ks and 10Qs. The 10Qs for period 2001 to 2004 and for the 10Ks she used quite a few.

Mr. Brennan asks further, Those 2003 to 2007 10Ks.. Did you review them all?

Botosan: Yes.

Q: Was the information contained within these documents used in your report presented to the jury?

Botosan: Yes.

Q: You were also engaged by SCO for work in another case?

Botosan: Yes.

Q: Was that IBM?

Botosan: Yes.

Q: When was that?

Botosan: 2005.

Q: How much were you paid?

Botosan: I don't recall.

Have you published (peer reviewed papers) on lost profits?

Botosan: No (some qualifications that she believes no one would publish academic papers on lost profits).

Q: You're not an expert in programming?

Botosan: No.

Q: Computers?

Botosan: No.

Q: Linux?

Botosan: No.

Q: Computer operating system markets?

Botosan: No.

Q: Issues of computer software licensing?

Botosan: No.

Q: Are you an IP expert?

Botosan: It depends on area, she considers herself an expert in market analysis IP.

Q: Expert on patents?

Botosan: No.

Q: Is it fair to say you are not an expert on copyrights?

Botosan: That's fair.

Q: Trademarks?

Botosan: No.

Q: Before this, you've only written one other expert report?

Botosan: No, two.

Q: What others?

Botosan: LifeWise v E-Trade, Freightliner.

Q: In LifeWise you state you are not an expert in business valuation?

She asks for the quote on that. Mr. Brennan refers to her deposition testimony in this case from February, page 26 and 27. Dr. Botosan admitted that she had stated on being requested she hadn't felt qualified for many reasons, including that she was being brought in too late.

Q: Your analysis is dependent on Dr. Pisano?

Botosan: Not solely.

Q: But you relied on Dr. Pisano?

Botosan: Yes, in part.

Q: His report is dependent on surveys?

Botosan: Yes.

Q: Do you know the methods of the surveys?

Her reply begins, Dr. Pisano explained during his testimony... She was then cut of by Judge Stewart directing her to only answer the questions.

Q: You relied on his expertise?

Botosan: Yes.

Q: Your high end number is based on Dr. Pisano?

Botosan: Yes.

Q: And the low end on your analysis?

Botosan: Yes.

Q: When was this case filed?

Botosan: January, 2004.

Q: So you were contracted three years after the lawsuit was filed?

Botosan: Yes.

Mr. Brennan asks her to turn to her report to the list of materials she used to prepare the report, and asks, You used the motion for summary judgment?

Botosan: Yes.

Q: Did you only rely on documents provided by SCO?

Botosan: No.

Q: What else?

Botosan: Public reports.

Mr. Brennan, How did you find those?

Botosan: Both on request from SCO for reports and by Internet search.

Q: A Google search?

Botosan: Yes.

Q: And what were your Google search terms.. Novell?

Botosan: Yes.


Botosan: Yes.

Q: Copyrights?

Botosan: Yes, in relation to SCO and Novell.

Q: Does the computer software developer community follow the case?

Botosan: I expect so.

Q: Do you believe the computer software developer community follows developments in the case?

Botosan: They probably don't read the filings in the case, but generally, yes. (Reporter's comment: I must have misunderstood, I thought she reported she used a Google search. Perhaps she's not a Google search expert either, because you can't plug in those search terms and not run across Groklaw, for example, where it's obvious large numbers of the developer community avidly read all the filings.)

Q: Do you believe companies might base their purchasing decisions on reporting on this case?

Botosan: Yes, they would use all information.

Q: Is there any place, or anything, that SCO told you not to use?

Botosan: No.

This database of documents, did SCO give you a username and password to log in and do searches?

Botosan: I don't recall, but it involved an FTP or something.

Q: And the Deutsche Bank report, did you get that from SCO?

Botosan: I don't recall, I'd asked SCO's attorneys for help finding reports. I don't know if that report came from them.

(Missed some questions about other analysts.)

Q: Are you aware of the letters from (Novell's) Jack Messman?

Botosan: Yes.

Q:Aware of statements in the press release of December 22?

Botosan: Yes.

Mr. Brennan says he'd like to define a phrase, the "quiet time" to be from June 6th to December 22nd. Did SCO enter into any licenses during that period?

She answers, perhaps Computer Associates, but not sure.

Q: And the RTU program was announced in August?

Botosan: Yes, around that time frame.

Q: Did SCO enter into any licenses between August and December 22nd?

Botosan: None, through the end of the October 2003 financial quarter. There was in quarter November, December, January, but don't know if in first two months.

Mr. Brennan asks, How much then?

Botosan: $20,000

Q: So, during the period June 6 through December (and add in January), the only revenue SCO generated is about $20,000?

Botosan: (long answer) Yes.

Q: Did you understand SCOsource was a new business?

Botosan: No, it was a new product.

Mr. Brennan reviews with her what the RTU license is and asks, Is it a product?

Botosan: Yes. She says she doesn't believe a product needs to be material, that even her using her expertise in testifying can be a product.

Mr. Brennan asks, Is it a promise that SCO would not sue for use of Linux?

Botosan: It's a license for infringing code in Linux.

Q: When did The SCO Group, as a company, start?

There were a number of fumbled answers and obvious confusion over SCO's history, including confusing it with Santa Cruz's history. She states she doesn't know if Caldera existed prior to its purchase of Santa Cruz in 1995.

Mr. Brennan asks how she would use historical data of a business to project the future. She states it depends on if startup or long-term business. She states that for a startup, she would look at the market as Dr. Pisano had. For long-term business she would look at its historical performance. She would look at all information.

Mr. Brennan asks again if SCOsource is a new business or new product? She replies that it's a new product line in an existing business.

Q: Did you look at previous financial data for Caldera/The SCO Group in making your report?

Botosan: Yes, first quarter 2002 through (? quarter) 2007.

Q: What about 2002 was there a loss?

Botosan: Loss.

Q: And 2001?

Botosan: Loss.

Q: And 2000?

She replies that based on company statements she's read, SCOsource provided the company's first profitable quarter, so she assumes a loss.

Q: So you would agree that prior to 2003 SCO had never made a profit?

Botosan: Yes, I think.

Q: In making a forecast would you do a risk factor analysis?

Botosan: Yes, I would look at risks in the market.

Q: So to make a forecast you would take into account the risk factors in the market?

Botosan: Yes.

Q: What risk factors did you take into account?

Dr. Botosan answers that infringement did not exist, hostility in the Linux community, other indemnification products... She states that all these were taken into account by Dr. Pisano's analysis and also discussed and included in the analyst's reports.

Q: So one of the risks is that Linux does not infringe?

Botosan: Yes.

Q: Hostility toward SCO you learned from Deutsche Bank?

Botosan: Yes.

Q: And by Internet searches?

Botosan: Yes, it's hard to do a search without finding news reports.

Q: Were there any other risk factors?

Botosan: Yes, not buying SCOsource, but instead a switch, but that was treated as a low probability. Also "design around" but that didn't get much traction.

Q: What do you mean by not getting much traction?

Botosan: The analysts said... (missed).

Q: What about the GPL?

Botosan: Yes, Deutsche Bank talked about it, so it was built into their forecasts.

Judge Stewart then called a break. As usual we all rose as the Jury left. The general practice is that if the judge stands, so does everyone else. Normally, Judge Stewart would then sit back down and continue hearing case management issues. In this case he did not sit back down, but started talking about Novell's potential pursuit of questioning on prior rulings. Therefore we did not sit back down and I was unable to take any more notes.

From memory: Mr. Brennan described his line of questioning trying to undermine Dr. Botosan's "But for" world with the "Real world." They discussed how close he is, or might come, to mentioning the rulings. Judge Stewart read the statement he intends to make that the rulings were "reversed." He said he chose the word "reversed" because the jury may find it more neutral than "overturned." Judge Stewart ruled that Novell may continue and mention the prior rulings as he believes Novell may use them in attempting to show the "disconnect" between Dr. Botosan's "make believe" world and the "real" world.

However he imposes significant caveats to his ruling. He states that he may not bring it up simply to put it before the jury, but it must be appropriately probative and relevant. That if Novell goes down a fruitless and without merit line of questioning where Dr. Botosan repeatedly resorts to "but that's not part of my But For world so it's not relevant" then the court may look on it unfavorably. Mr. Hatch requests that Judge Stewart add to his jury instructions that the ruling was "unanimous." Judge Stewart looks pained, but replies, "I'll grant that."

In one of the breaks, possibly this one, there were discussions about Novell's intention of questioning Dr. Botosan regarding the actual costs incurred in legal fees for the Microsoft and Sun agreements. Novell contends these legal costs were not properly included and deducted for the cost of goods sold that Dr. Botosan calculated. (These are not believed to be the SCOsource litigation-related legal fees, but the contingency fees/legal expenses of the two agreements, but Novell never stated precisely).

SCO's Mr. Singer argued that legal fees are never used as part of damage calculations and shouldn't be here. SCO is also concerned about the jury prejudice since the fees are paid to BSF (who's also the instant legal counsel). Judge Stewart agrees regarding the prejudice and doesn't want the law firm named, but he won't prevent Novell using it, but instead will handle SCO's objections as it unfolds.

We then went on break.

After the break, Mr. Brennan continues questioning, refers to exhibit R21, Deutsche Bank article dated October 4, 2003 titled "SCO, A Call (option) to Arms" and asks, Is this the report you used?

Botosan: Yes, this is the Deutsche Bank report I made reference to.

Mr. Brennan reads the two names identified as the authors and asks if Dr. Botosan has had contact with them?

Botosan: No, but she's made one call to Deutsche Bank about the report. She doesn't know the name of the person.

Mr. Brennan reads from the first paragraph including "extremely high risk." He reads the 2nd paragraph as well. The report states that "...a failure in either one would render the stock worthless." Mr. Brennan asks, Were you aware that Deutsche Bank is a "market maker" for SCOX? Mr. Brennan briefly states what a "market maker" is.

She answers that you'd have to go back and look to find the relationship (at the time).

Mr. Brennan states that Deutsche Bank issued another report in January 2003, exhibit C25, which clearly states that they are a "market maker" for SCOX.

Dr. Botosan said she doesn't know if they were at the time of the October report.

When he stated that the Deutsche Bank analysts worked for the same company that's trading SCOX stock, Dr. Botosan replies that by law the stock brokerage must be a separate firm.

Mr. Brennan reads from the report that traders can expect "significant fluctuations daily based on news reports... Fluctuations of 20% daily can be expected based on legal maneuvering." He asks Dr. Botosan if that's correct, and she says it is.

Q: Is it correct that legal maneuvering includes the IBM case?

Botosan: Correct.

Q: Are you aware that Red Hat filed suit against SCO for determination of non-infringement of their Linux?

Botosan: She said she was not aware.

Mr. Brennan reads further from the DB report, "... our thesis is that SCOX shares can be considered a call option...." and "...SCOX has frustrated the Linux community..."

He asks, You had access to SCO's database, so you looked at the litigation files?

Botosan: Yes.

Q: You looked at the Motion for Summary Judgment? Objection by Mr. Hatch (foundation?), overruled, but Judge Stewart suggests Mr. Brennan back up. Mr. Brennan asks, You told me people in the community were interested in the case?

Botosan: Yes.

Q: Those in the Linux community following litigation?

Botosan: True.

Q: You understood decision makers would base decisions on what happens in litigation?

Botosan: Yes, it was built into the forecast, it was known by the market.

Mr. Brennan says, Lets look at the "real world." He presents Judge Kimball's June 4, 2004 memorandum decision and order. Mr Hatch quite quickly objects on basis of foundation. Judge Stewart says the objection is overruled as it's being used to impeach the witness.

Mr. Brennan asks Dr. Botosan (and the tech) to focus on page 8, the last full paragraph on the page, and he starts reading. Judge Stewart interrupts and addresses the jury saying (approx), "You will hear evidence from a ruling in this case, and possibly another ruling, and possibly ask yourself why you are here.... SCO appealed these rulings and the 10th circuit court, in a unanimous decision, reversed these decisions and directed them to go to a jury for decision. That is why you are here. The appeals court found the decisions to have been in error."

Mr. Brennan continues, reading the full paragraph, then turning the page and starts reading the first paragraph there. Mr. Hatch says he has a substantial objection and asks if there's even a question in there. Judge Stewart inquires and Mr. Brennan says there is a question coming. Judge Stewart overrules Mr. Hatch's objection and repeats that this ruling has been reversed and found to be in error. He says he's going to trust Mr. Brennan, who then reads on to the end of the paragraph. When he finishes reading, Judge Stewart again addresses the jury and instructs they are to disregard the language as it's been subsequently reversed and that the only reason it's being used is to challenge this witness.

From the rustling I heard, I think just about everyone in the court shifted position in their seats after this.

Mr. Brennan asks, Would investors have taken this into account when deciding whether to take a SCOsource license?

Dr. Botosan replied, Not in the "but for" world. So those people would not have seen this ruling as it would not have existed.

Mr. Brennan pressed the differences between her "abstract" world and the real world and asks, Wasn't the Deutsch Bank analysis based on the Real World... and that calculation of damages must consider what happened in the real world?

Botosan: No.

Mr. Brennan asked questions very fast at this point and I missed a lot. Amongst the questions was one asking if Dr. Botosan "cherry picked" from the Deutsche Bank ruling "real world" things she wanted to use and not others? No. All of his questions seemed to impress upon the listener how different Dr. Botosan's "But for" world was from the real world. Mr. Hatch objects to the line of questioning and asks for a sidebar. It went on for longer than most and everyone who returned from it looked pretty grim.

Mr. Brennan returns to exhibit R21, the Deutsche Bank report, 'A call to arms' and directs Dr. Botosan to page 10 section entitled, "Unix, Linux, IBM" and a chronology of Unix ownership starting "In addition to its..." Mr. Brennan reads the paragraph and asks, Do you see that?

Botosan: Yes.

Q: You understand there is a question of SCO's claim to ownership?

Botosan: No, I understand the analyst writing this believed not.

Mr. Brennan asks, Do you believe you must be cognizant of developments in the real world?

Botosan: Yes.

Q: Does the jury?

Botosan: It's up to the judge.

Mr. Brennan responds, Fair enough. And asks, And the market?

Botosan: Yes.

He refers to her report stating $53 million in projected 2004 sales in her artificial world. She says that's correct. Mr. Brennan asks if Novell had done nothing wrong in the real world, if that would still be correct. Dr. Botosan states emphatically, But Novell *did* do something wrong in the real world or else we wouldn't be here.

Mr. Brennan, "Hmms" and says that's interesting.

He produces Judge Kimball's August 10th, 2007 summary judgment, and over objection of Mr. Hatch it's admitted.

Mr. Brennan asks Dr. Botosan if, between the June 2004 and August 2007, there were any rulings dealing dispositively with the ownership?

Botosan: No. Mr. Brennan asks, In those three years the people in the real world had only those rulings?

Botosan: Yes.

Mr. Brennan directs attention to the ruling at the end but Judge Stewart directs Mr. Brennan to only provide a verbal summary of the judgment. Mr. Brennan gives a fair, but short, summation of its ruling including that Judge Kimball, as a matter of law and based on the APA, Amendment 1, and Amendment 2, ruled that the copyrights did not transfer.

Mr. Brennan asks, In the real world, people would not have purchased licenses in 2007 based on ruling?

Botosan: She states that it's not relevant. Mr. Brennan asks further if, In the real world people in 2004 would not have purchased based on ruling?

She answers that it's not relevant.

Mr. Brennan asks if in the years between 2004 and 2007, when there were no dispositive rulings in the real world to the contrary, would people have purchased? Dr. Botosan provides lots of "Not relevant" answers.

Mr. Brennan states, In the real world there are real events that are relevant to the "But for" world.

Again, there are lots of questions on real events being confirmed to not exist in her "But for" world. Then Mr. Brennan says he's going to change gear. He asks her about her cost estimates used to determine profit. Are legal expenses in costs?

Botosan: Yes.

Q: Are they "real" or "artificial?" (I believe she said something to the effect that they are standard and based on information from SCO.

Mr. Brennan asks about the two agreements in 2003, that they are $25 million. Is revenue forecast based on these?

Botosan: No.

Q: But Deutsche Bank did?

Botosan: No.

Q: And these were UnixWare licenses or Unix?

She doesn't quite understand the question, but eventually answers, They were vendor licenses in the SCOsource division, so these were not Unix licenses.

The court then took a break during which it was decided that Mr. Chris Stone's testimony would be taken the next day. Judge Stewart asks Mr. Brennan how much longer he has to go, and Mr. Brennan responded, about 20 minutes. However, on returning from break, Mr. Brennan told Judge Stewart that SCO's present scrambling is because he just told them he's only going to return to say, No further questions. Judge Stewart opined that they must have been happy to hear that.

When the Jury returned, Mr. Brennan took the podium and said he had no further questions.

Mr. Hatch then started redirect and put up the poster boards Dr. Pisano had previously done her calculations on.

He referred to the 2004 court decision and asked what kind of motion was it? She answers it was a motion to dismiss. Mr. Hatch asks, Was it found in favor of SCO? Yes.

He refers to the 2007 decision and asks its eventual outcome? She answers it was overturned. Mr. Hatch asks, In favor of SCO? Yes.

He further asks, As a result of those decisions, is that why we're here today? Correct.

Mr. Hatch asks if the Deutsche Bank report identified risk factors? Yes. Hatch, Did you take them into account? Yes, they were also taken into account in Dr. Pisano's analysis. The risk factors he identified were company risk factors that might affect stock price, but not SCOsource.

(Reporters comment: A risk factor that SCO may go out of business, a possibility stated in their SEC filings, does not put SCOsource at risk?)

Hatch: SCO's stock price was $16 the day before the report came out. With all the risks, and all the pros, what target price did Deutsche Bank estimate?

Botosan: Over a 12-month period, $45.

Mr. Hatch turns to the posterboard with her calculations and says, I'm putting the pen right here and I'll let you come up here and change whatever you want based on the arguments today. Botosan says there's nothing she would change, hesitates, well except for one small thing. Mr. Hatch asks, What's that? She asks, could you rub out the $0? Mr. Hatch replies, I don't think the judge will let me do that. Judge Stewart smiles and says, No.

Mr. Brennan given opportunity for re-cross. He refers to the June 2004 ruling, at the end of the order, and asks, You understand that before the court were three motions? No. He continues, SCO asked to send back to state court... He started to read further to which Mr. Hatch objected and was sustained.

Mr. Brennan refers to a news article regarding the ruling. Mr. Hatch objected and was sustained.

Mr. Brennan states he has no further questions.

Mr. Hatch stated that SCO may ask her to come back and Judge Stewart instructed Botosan that she is free to go, but is subject to recall.

End of Part 1.

Again today, I continue to run behind schedule.. I will provide Part 2 tomorrow, consisting of the deposition testimony of Gasparro, Langer, and Pettit. With no video available, the deposition testimony of Gasparro and Pettit were done by lawyers taking the witness stand and acting the parts.

Part 2 - Deposition testimony of Gasparro, Langer, & Pettit

SCO's Mr. Hatch calls Lawrence Gasparro (by deposition) and indicates they have no video of the deposition and will instead read it.

Judge Stewart then instructs the jury that occasionally depositions are not videotaped as they have been accustomed to seeing. And he says that what they are about to see is a typical method of presenting the testimony in that one of the lawyers will take the stand and play the part of the deponent. And each lawyer will read the lines of testimony.

SCO's Mr. Edward Normand takes the witness stand while Mr. Brent Hatch asks the questions. In my report as Mr. Normand reads the answers, I will indicate it was Mr. Gasparro who answered. I did not catch the name of the deposition examiners or cross-examiners so I will be using the live reader's name. I believe the deposition is dated October 27, 2004.

Mr. Hatch asks Mr. Gasparro, When did you first begin work with SCO?

Gasparro: 2004

Q: In regard to the EV1 and Robert Marsh, what was the sale price?

Mr. Gasparro indicates it was $800,000 plus additional marketing agreements.

Mr. Hatch, And how much originally?

Gasparro: 3 to 600,000.

Q: Was there any negative feedback from members of the licensing program?

Gasparro: Yes.

Q: Were they affected by the IBM litigation?

Gasparro: Yes

Q: Novell?

Gasparro: Yes.

Q: The Open Source Defense Fund?

Gasparro: Yes.

Q: By IBM's $10 million contribution to the Open Source Defense Fund?

Gasparro: Yes.

Q: What responses were you getting from customers?

Gasparro: Novell's claim to copyrights affected their decision.

Q: How much did you lose because of Novell?

Gasparro: We developed a list of those who did not take a license because of Novell. He lists some company names. But he says he remembers the total being around $50 to $60 million.

Q: How did you come to that figure?

Gasparro: It was based on unit volume, how many servers each of those companies had.

For cross examination, Novell's Mr. Acker read for Mr. Gasparro and Mr. Jacobs asked the questions. Judge Stewart instructed the jury they should evaluate based on their words and not their acting ability. Mr. Jacobs opined he should keep his (own) day job.

Mr. Jacobs refers to an email from Mr. Gasparro to Mr. McBride and asks, What suggestion were you making to Mr. McBride? Mr. Gasparro answers that they were getting a lot of pushback from (potential) customers.

Mr. Jacobs reads from the email where it asks Mr. McBride if SCO should publish the results of the code auditors. Mr. Jacobs asks, Were you ever shown the work produced by the auditors?

Gasparro: No.

Mr. Jacobs asks, Were you ever provided the code auditors' results as a result of your request?

Gasparro: No.

Then next deposition is the November 5th, 2004 video deposition of Philip Langer. I will refer to the questioners as SCO and Novell since I did not note either of their names.

Mr. Langer states that he started with Santa Cruz in 1998 as a sales associate selling Unix, Unix support services, and UnixWare.

With The SCO Group he worked in IP sales until 2004 under Mr. Gasparro. He said he received credit for the Questar Gas license though he wasn't involved in the sale. The sales he was successful on was EV1 and Everyone's Internet.

SCO asks, And did Computer Associates purchase?

Langer: No, only two purchased.

Q: And you contacted a lot of people?

Langer: Yes.

Q: Did there come a time Novell made an announcement?

Langer: Yes.

SCO asks, At the time they did that, did it negatively affect sales? Yes.

You were unable to sell because of that announcement? Yes.

SCO asks, Did you do anything to counter it?

Mr. Langer answers, Yes, we pointed them to our website contracts, (told them that) we've been selling Unix for six years. It's a no-brainer.

Q: Did you read the contract?

Mr. Langer answers that he looked it over.

SCO asks how much he expected to sell?

He replies that he expected two to three million dollars in his territory for the year.

Asked when, he says it was after Novell's announcement in June, but after the retraction. He said, but then people started doing their homework.

SCO asks regarding Regal Entertainment Group.

Mr. Langer says they were moving forward with purchasing. He said they wanted to get done before the end of the month.

When asked, he states that it was going to be for $350,000. He stated that they decided they won't purchase until the ownership issue is settled.

Novell cross-examined asking, You don't know the infringing code in Linux?

Langer: No.

Q: Have you asked (SCO) for information (on the infringing code)?

Langer: Yes, I've asked.

When asked, he answers that he's not seen any.

Novell: Who'd you ask?

Langer: Mr. Gasparro.

Q: Did SCO provide any?

Langer: No, general but no specific.

Novell asks, Customers wanted line-by-line?

Langer: Yes.

Q: Did you tell customers you would not do it?

Langer: Correct.

Q: And you told them you would not do it or that you could not do it?

Langer: We told them we would not do it.

Next is the deposition of Gregory Pettit. Again, no video was available so SCO's Mr. Normand read again for the deponent and Mr. Hatch examined.

Mr. Hatch asks, Did anyone approach you about IP in Linux?

Pettit: Yes, NASDAQ, Raytheon, (some more).

Q: Were any meetings set up?

Pettit: Yes, with Raytheon.

Upon being asked, Mr. Pettit said that for the meeting he accompanied Mr. Gasparro. Dispute by code and by contract. They referred to the malloc code but it was not shown (to Raytheon). He said that Raytheon then went off to determine their use of Linux.

Mr. Hatch asked, Any others wanting to see more material?

Pettit: Yes, Cisco, (some more).

Mr. Hatch aksed if he made a proposal to Merrill Lynch?

Mr. Pettit answers that they provided them different prices for different ranges. They chose not to because of Novell's statements.

Mr. Hatch refers to SCO exhibit 188. Mr. Normand (playing Mr. Pettit) acts as if he is taking time to review the document. After a few moments Mr. Hatch says that it's a letter from Morgan Stanley to yourself.

Mr. Hatch asks, Did you provide the information requested?

Pettit: No, our program worked with those willing to work with us.

Mr. Hatch refers to SCO exhibit 165(?) (now Novell exhibit F27), the Google letter from Michael (I didn't make note of last name, but suspect CTO Michael Jones).

Mr. Hatch asks what happened when you finally hooked up? Mr. Pettit answers, We said we could do an NDA and go over the code. There was no meeting. There were questions raised about ownership (of Unix).

Novell's Mr. Jacobs cross-examines while Mr. Brennan plays the part of the Mr. Pettit.

I'd note that in both depositions acted by the attorneys, SCO read the deponent's part with a strong confident voice and Novell read the deponent's part with a meeker hesitant voice. Not having heard the original audio, there's no way to tell who was closer to being accurate.

Mr. Jacobs, Did anyone you called ask for more detail?

Pettit: Yes.

Q: What would you have sent?

Pettit: We wouldn't have sent anything. We would have had an executive come in (and meet with them).

Mr. Jacobs asks, So it was "We'll get back to you?" (missed response).

Mr. Jacobs asks, Was any provided to your customers?

Pettit: No.

End of day's session. Judge Stewart provided yet another warning to the jury.

02:49 PM EDT

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