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(Note: This page needs updates BADLY in light of SCO's apparent new axis of attack involving BSD, Project Monterey and the Sequent contracts. Not to mention the Santa Cruz - Novell asset purchase agreement. More TK.)

I am not a lawyer, etc. etc. but I have waded through the various Unix license agreements submitted as Exhibits A-G by SCO.

SCO has claimed at various times, in numerous overlapping and contradictory statements, that:

SCO has cited parts of one AT&T licensing agreement out of context, and without reference to subsequent amendments, in an attempt to substantiate these claims.

A very rough analysis of the contracts suggests:

Episode One: USL and BSD

As a number of people have noted on this and other sites, Dennis M. Ritchie of Bell Labs / AT&T / USL / Lucent / whatever this week fame has posted some old documents from the BSDI case. Thanks to "ra" on Groklaw for pointing out footnote 13 from the University of California's amicus brief dated Jan. 7. 1993.

The amicus brief presents a defense to USL's infringement charges by highlighting AT&T's past statements about ownership of derivative works -- at least under the educational licenses signed by UC. But one footnote also cites a memo reportedly sent to all UNIX licensees in 1985 -- a memo clarifying that "AT&T will claim ownership in the software that they developed -- only the portion of the software developed by AT&T."

The implications for SCO's embattled claims regarding the AT&T, Sequent and SGI licenses are obvious.

Here it is in context:

Shortly thereafter, AT&T further memorialized the parties' understanding regarding ownership and distribution of Unix enhancements by drafting the Educational Software Agreement No. E-SOFT-00089 (SOFT-00089). Wilson Depo.,at 139:10 -140:1 (the SOFT-00089 agreement was a "clearer representation of our intent")[fn11]. This supplemental agreement executed in November 1985 expressly provides that AT&T claims no ownership interest in the University's software as long as it does not contain AT&T's source code or disclose its methods and concepts.[fn12] Consistent with the May 15, 1985 letter-amendment (Exh. A to Karels Decl.) SOFT00089 provides in its "Grant of Rights:"

Para. 2.01 (a) ...[the] right to use includes the right to modify such SOFTWARE PRODUCT and to prepare derivative works based on such SOFTWARE PRODUCT, provided that any such modification or derivative work that contains any part of a [AT&T] SOFTWARE PRODUCT subject to this Agreement is treated hereunder the same as such [AT&T] SOFTWARE PRODUCT. *AT&T-IS claims no ownership interest in any portion of such a modification or derivative work that is not part of a [AT&T] SOFTWARE PRODUCT.* (Emphasis added.)

Para. 2.01(b)(ii) ...results enhancements and modifications (all to the extent that they do not include any portion of [AT&T] SOFTWARE PRODUCTS) are made available to anyone (including AT&T-IS and its corporate affiliates) without restriction on use, copying or further distribution.... Exhibit G, attached to the Shapreau Decl.

Thus, again, AT&T agreed in writing that the University owned all derivative code and that such derivative enhancements and modifications should be made "available to anyone" to the extent "they do not include" AT&T code.[fn13]

[fn11] The SOFT-00089 license agreement was intended to "clarify" the prior intent of the parties.Wilson Depo., at 139:10- 140:1. AT&T's Director of Licensing, Otis Wilson, testified that the language used prior to that contained in the SOFT-00089 license agreement was "somewhat confusing to some people in that they thought we were trying to assert ownership to anything they created, even though it contained nothing of ours. So this is to clarify that what's yours is yours and what's ours is ours"(emphasis added). Wilson Depo., at 75:24-76:4. USL's Mitzi Bond admitted that she understood 2.01(b)ii) meant that "enhancements and modifications made by the licensee were to be made available to anyone so long as they did not include any portion of the software products licensed under the agreement" emphasis added). Bond Depo., at 137:19-138:19. However, Ms. Bond also has espoused a mental "contamination" theory by which any university student exposed to AT&T code would be beholden to AT&T for any software product he/she might subsequently develop. Bond Depo,at 220:2-13, 237:24- 238:8.


[fn13] It appears that AT&T similarly tried to restrict other licensees' rights with respect to code they derived from AT&T's UNIX, because AT&T sent out a clarification to all its licensees in August, 1985 which stated: "Section 2.01. The last sentence was added to assure licensees that AT&T will claim ownership in the software that they developed -- only the portion of the software developed by AT&T." Exhibit H, attached to the Shapreau Decl. The 2.01 referred to in Exhibit H is the same 2.01 contained in the SOFT- 00089 agreement. Frasure Depo., at 1 08:21 -1 1 0; 1 1 2:7-21. USL's Mitzi Bond participated in the preparation of Exhibit H. She testified that the clarification to 2.01 "indicates that all we did was add a sentence to the existing one so that licensees would clearly understand that we were not claiming the ownership in code that they developed that didn't contain ours" (emphasis added). Bond Depo., at 189:14-191:21.

Go Bears.

Exhibit A (Agreement SOFT-00015), dated Feb. 1, 1985:

This seems to be a standard AT&T Unix license agreement giving AT&T the right to use Unix for "internal business purposes." Interpreted literally it is quite restrictive. However, it is modified by two amendments signed on the same date.

As in any business contract, much hinges on the definition of the various terms used. In this case, the term SOFTWARE PRODUCT carries much weight. By SCO's interpretation, it's anything that ever touched the source code of any Unix flavor. But according to para 1.04 it's:

1.04 SOFTWARE PRODUCT means materials such as COMPUTER PROGRAMS, information used or interpreted by COMPUTER PROGRAMS and documentation relating to the use of COMPUTER PROGRAMS. Materials available from AT&T for a specific SOFTWARE PRODUCT are listed in the Schedule for such SOFTWARE PRODUCT.

The supplements attached to Exhibit A list such "SOFTWARE PRODUCTS" as documentation, boot loaders, file system structures, source code for system software, etc. The list is as extensive as it is specific, including such items as:

Paragraph 2.01 adds modified copies and "derivative works" to the list:

2.01 AT&T grants to LICENSEE a personal, nontransferable and nonexclusive right to use in the United States each SOFTWARE PRODUCT identified in the one or more Supplements hereto ... Such right to use includes the right to modify such SOFTWARE PRODUCT and to prepare derivative works based on such SOFTWARE PRODUCT, provided the resulting materials are treated hereunder as part of the original SOFTWARE PRODUCT.

SCO is fond of citing the above paragraph, especially the part about "derivative works." (See slide #5 from the notorious SCOForum dog-and-pony show.) However, these terms were amended extensively as we shall see below.

Paragraph 6.03 grants AT&T the right to terminate the agreement in the event of breach of contract:

6.03 If LICENSEE fails to fulfill one or more of its obligations under this Agreement, AT&T may ... terminate all the rights granted by it hereunder by not less than two months' written notice to LICENSEE specifying any such breach ... upon such termination LICENSEE shall immediately discontinue use of and return or destroy all copies of SOFTWARE PRODUCTS subject to this agreement.

However, this much-quoted section has also been modified extensively by subsequent amendments. SCO may have implicitly recognized this fact by giving IBM the 100-day notice specified by one of these amendments, rather than the 60-day notice specified in paragraph 6.03.

A later paragraph binds IBM to a non-disclosure agreement that specifically mentions methods and concepts. However, the same paragraph also incorporates a "get out of jail free" clause also echoed in subsequent agreements:

7.06(a) Licensee agrees that it shall hold all parts of the SOFTWARE PRODUCTS subject to this agreement in confidence for AT&T. Licensee further agrees that it shall not make any disclosure of any or all such SOFTWARE PRODUCTS (including methods or concepts utilized therein) ... If information relating to a SOFTWARE PRODUCT subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, LICENSEE'S obligations under this section shall not apply to such information after such time.

SCO seems particularly fond of citing the first part of this paragraph. Altered fragments of the first two sentences can be found in one of the SCO Forum slides -- with "AT&T" replaced by "SCO" in a crude fabrication. (See frame #7 of the SCO Forum slide show.)

However, this paragraph was superseded by an amendment to the contract, which appears below in the analysis of Exhibit C. This amendment gives IBM broad rights to UNIX concepts and methods. Remember, IBM had and still has some of America's brightest lawyers at its beck and call. But even as it stands, the paragraph suggests that UNIX concepts, methods or source code made public since the agreement -- by Bell Labs employees, textbook authors, the BSD settlement or even Caldera/SCO itself -- may well be unencumbered by the license agreement. (Depending, perhaps, on the interpretation of "without restriction.")

Exhibit B (Agreement SUB-00015A), dated Feb. 1, 1985:

SUB-00015A extends the license agreement and grants IBM a limited right to sublicense Unix, subject to many of the same terms and conditions.

Para 2.05(b) allows for the possibility that a licensee or sublicensee might hold some intellectual property rights in modifications made to some part of Unix -- say, for example, a systems integrator or VAR selling AIX with a bawdy fortune file.

"If LICENSEE and AUTHORIZED COPIER agree in writing that all right, title and interest in the resulting modifications belong to LICENSEE ..."

Exhibit C (letter of understanding from AT&T to IBM) dated Feb. 1, 1985:

Here we have the "what's yours is yours, what's mine is mine" clause:

"3. Regarding Section 2.01, we agree that modifications and derivative works prepared by or for you are owned by you. However, ownership of any portion or portions of SOFTWARE PRODUCTS included in any such modification or derivative work remains with us."

Say, for example, that IBM created a data compression library (let's call it libzee.a) and modified AT&T's original "tar" utility by adding on-the-fly compression. By my interpretation, paragraph 3 would grant ownership of libzee.a and IBM's hypothetical changes to "tar" to IBM. However, AT&T would retain rights to all of the original "tar" source code.

This paragraph suggests strongly that non-UNIX specific parts of technologies such as SMP, NUMA and JFS fall outside the scope of the license agreement. Indeed, it seems difficult to arrive at any other interpretation.

In paragraph 5, AT&T agrees to extend the 60-day revocation notice period from agreements SOFT-00015 and SUB-00015A to 100 days. However, these conditions were modified again by Amendment X, as will be seen below.

Paragraph 8 proves that IBM's lawyers weren't asleep when these contracts were drafted. This paragraph changed the critical Section 7.06(a) of the original software license to allow use of covered concepts and techniques as long as IBM's developers didn't use the actual Unix code as a reference:

8. Amend section 7.06(a) by replacing such section with the following:

7.06(a) LICENSEE agrees that it shall hold SOFTWARE PRODUCTS subject to this agreement in confidence for AT&T ... Nothing in this agreement shall prevent LICENSEE from developing or marketing products or services employing ideas, concepts, know-how or techniques relating to data processing embodied in SOFTWARE PRODUCTS subject to this Agreement, provided that LICENSEE shall not copy any code from such SOFTWARE PRODUCTS into any such product or in connection with such service and employees of LICENSEE shall not refer to the physical documents and materials comprising SOFTWARE PRODUCTS subject to this agreement when they are developing any such products or service or providing any such service. If information relating to a SOFTWARE PRODUCT subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, LICENSEE'S obligations under this section shall not apply to such information after such time.

This paragraph appears to give IBM broad rights to UNIX-flavored development concepts and methods. In any case many of these concepts and methods have long since been made public without IBM's direct participation.

Exhibit D: Amendment No. X (October 1996)

This appears to be a one-time license buyout executed between Old SCO, Novell and IBM. While the earlier agreements contained numerous details of renewal, cancellation and revocation rights, Amendment X states:

1. Upon payment to SCO of the consideration in the section entitled 'Consideration', IBM will have the irrevocable, fully paid-up, perpetual right to exercise all of its rights under the Related Agreements beginning January 1, 1996 at no additional royalty fee.

So here's where IBM gets its "irrevocable, fully paid-up, perpetual right" mantra.

But para. 1 continues:

Notwithstanding the above, the irrevocable nature of the above rights will in no way be construed to limit Novell's or SCO's rights to enjoin or otherwise prohibit IBM from violating any and all of Novell's or SCO's rights under this Amendment No. X, the Related Agreements, or under general patent, copyright, or trademark law.

The phrase "enjoin or otherwise prohibit" suggests the contract limits the licensors to injunctive relief. Also of interest is the explicit recognition, as of October 1996, that Novell retained some IP and/or contractual rights.

Exhibit D -- Santa Cruz Operation Inc. Reference Source Code Agreement No. SOFT-2538

I find it curious that SCO bundled both Amendment X and SOFT-2538 together as the two documents seem to be independent of each other. Amendment X clearly modified the original agreements back to Exhibit A. As such it seems to apply to the System V source code and documentation listed in excruciating detail in the original contract (Exhibit A). The February 1998 agreement, SOFT-2538, explicitly applies to "reference software products" ordered after the signing of the agreement. Without a list of those orders SOFT-2538 seems to be essentially meaningless -- it states the detailed terms of a license for nothing.

From the date of the contract it seems reasonable to assume that it applies to SVR4 and/or SCO-developed code that IBM licensed for Project Monterey development. If so I would imagine that the original contracts and amendments remained in force with respect to earlier versions of System V used for AIX development.

SOFT-2538 does include a cancellation clause:

1.02 If YOU fail to fulfill one or more of YOUR material obligations under this Agreement, SCO may, upon its election and in addition to any other remedies that it may have, at any time terminate all the rights granted by it hereunder by not less than two (2) months' prior written notice to YOU specifying any such breach, unless within the period of notice all breaches specified therein shall have been remedied upon such termination, YOU shall immediately discontinue use of and return or destroy all copies of REFERENCE SOFTWARE PRODUCTS covered hereunder.

Once again, the cancellation clause seems to apply only to these mysterious "reference software products." It is also worth noting that SCO invoked the cancellation clause of Exhibit C, with its 100-day grace period, against IBM in March 2003. If SOFT-2538 applied to IBM's pre-existing licenses SCO would have invoked the above paragraph instead.

Remember the "get out of jail free" clause from Exhibit A? It's back with a vengeance.

3.04 YOUR obligations under this section shall not apply to a particular portion of the REFERENCE SOFTWARE PRODUCT which: (i) has become generally available to the public through acts or omissions not attributable to YOU; (ii) was already lawfully in YOUR possession unburdened by an obligation of confidentiality owed to SCO, prior to its receipt from SCO; (iii) is received by YOU independently from a third party who was free to lawfully disclose such information to YOU without breach of an obligation of confidentiality to SCO ... or (v) is independently developed by you with use of the REFERENCE SOFTWARE PRODUCT or SOFTWARE DERIVATIVE.

Sad that this "I own the contents of my brain" clause was even necessary ...

3.06 Notwithstanding anything to the contrary, YOU shall have the right to use residual information mentally retained by YOUR employees who in the ordinary course of their work pursuant to this Agreement, retain such information in non-tangible form after having access to REFERENCE SOFTWARE PRODUCT, provided that such employees make no deliberate attempt to preserve such information by reducing it to writing or to otherwise memorialize such information contemporaneously. However, nothing in this paragraph shall affect SCO's rights under patent or copyright laws.

And another jurisdictional clause:

13.02 The construction and performance of this Agreement shall be governed by the substantive laws of the State of California.

Exhibits F and G: Sequent contracts

These follow Exhibits A and B closely. SCO's lawyers (notably KevinMcBride) have claimed that Sequent signed a "standard contract" for Dynix as opposed to the amended contracts signed by IBM. By SCO's line of argument, the Sequent contracts hold IBM to greater restrictions when dealing with Dynix code.

This means SCO has admitted that IBM isn't bound by the draconian standard contract provisions of SOFT-00015. This also means that large parts of the case hinge on the enforceability of the old Sequent contracts against IBM.


SCO's Blake Stowell insists there's no such thing as an irrevocable license. But Joe Auer noted in a column from 1999: "[P]erpetual and irrevocable are key words in software licensing. Most suppliers these days offer neither, even though it used to be common practice."

Here's the quote in context:

So insist on broad license rights. Without the proper license, you may be subjected to sizable relicensing or use continuation fees downstream. To avoid that unpleasant surprise, negotiate a license with language such as: "In consideration of the license fee paid by User, Supplier hereby grants to User a perpetual, irrevocable, transferable, nonexclusive license."

This significantly reduces your risk and saves you money by assuring an ongoing right to use the software. With a perpetual license, you're buying the right to use the software to run part of your business for as long as necessary. You'll have to pay annual maintenance and support fees, but these should be your option.

Your license should also be irrevocable. Otherwise, suppliers may revoke your right to use the software, and that gives them immense leverage.

If the license is irrevocable, the supplier must convince a judge that you've done something wrong and get an injunction to halt your usage.

Remember, perpetual and irrevocable are key words in software licensing. Most suppliers these days offer neither, even though it used to be common practice. However, with a strong negotiating position on your part, a perpetual, irrevocable license can once again be obtained. Go get 'em, and you'll gain peace of mind and a better bottom line.

("Short-term software licensing: Don't buy it", Sept. 13, 1999)


Woo hoo! In this Sun Community Source License contract dated Feb. 22, 1999, Caldera Systems granted certain irrevocable rights to Sun Microsystems. OK, Blake, what was that about no such thing as an irrevocable contract?

-- AllanKim - 15 Nov 2003

-- AllanKim - 21 Aug 2003

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