Declaration of Tor Braham - the lawyer for Novell who drafted the APA(Groklaw)

Now is the time when the chickens are coming home to roost.

The declaration from Tor Braham is significant for a number of reasons. He was the attorney for Novell who drafted the APA. Ah, the APA.

And I have to suggest that this declaration pretty much seals the coffin for SCO. But, they did not get to just leave in peace, go away and die.

The declaration supports two primary facts. One, was that the copyrights were expressly and intentionally left out of the APA transaction. At one point they were in there. And then when it become clear that Santa Cruz did not have the funds to buy it all (as SCO lawyers like to claim), they were removed.

But, the most important aspect of this declaration is the support for the terms in the APA giving Novell the right to nix legal relations with SVRX licensees. And this is critical. It is not critical for IBM because the license was not violated anyway. However, it is a whole hand full of nails firmly hammered down on SCO's coffin.

I have mentioned before that you just do not put into contracts language to the effect of giving one party the ability to act on the part of another without restriction. You would think that Microsoft would put that into their EULA, right? I mean why not? The consumers have no choice. Or, at least that is what Microsoft wants to make them think. And why not just have Microsoft act in the interest of the customer for all legal issues arising out of the software or its use? That is what we are talking about here.

Such language in a contract is not normal. It is not boilerplate if you will. No lawyer worth two bits would permit a client to sign away their legal rights like that unless there were some very real reasons for doing so. And to make things even more clear, we now know that the APA was negotiated between Novell and Santa Cruz using two well respected law firms. One could certainly assume that. But, now we know. The result is that we now know that the power granted to Novell (or retained really) was not an after thought or lose end. It was negotiated. Novell did not trust Santa Cruz to act in a manner that would fully protect the revenue stream and customer relations going forward.

Novell had no assurance that Santa Cruz might go bankrupt either. And they certainly could not foresee Santa Cruz selling its business to Caldera much less Caldera hiring incompetent management. Or, simply management that thinks that the way to succeed in business is to disrespect the rights of others and just sue in order to steal property. Or to just stink up the industry so much that other players will buy you out.

The result of all of this is that Novell did negotiate to retain those powers and Santa Cruz agreed.

I mentioned in a prior article that the judge will be looking for the basis for having such terminology in place. Any judge knows that such a power is rarely granted to someone else. And normally when a business does change hands lock, stock and barrel as the expression goes, the seller does not retain any right to effectively overrule and control much of what the buyer might do. But, Novell did in this case. And it did so because it retained a substantial financial interest in those existing licenses. The precise licenses that SCO now wants to sue IBM over. Or, has sued since that case is fully under way. With this declaration from Mr. Braham, the judge has his answer. This is not some adhesion contract where one party has all the power and can dictate any manner of one sided terms. Ah no. These terms were agreed to between qualified lawyers who knew what they were doing and what they were agreeing to. The judge will have no problem acting in a manner consistent with the APA.

But, this declaration is important for other reasons as well.

And it has to do with possible law suits by shareholders against SCO management and SCO management against their lawyers. In my mind, this is where the sparks should really fly.

I recall in my own mind how my interest perked up when I first read about these terms giving Novell the ability to act in place of Santa Cruz on certain issues. And that was important simply because it does not matter if Santa Cruz and Novell were in agreement. But, if SCO (as successor to Santa Cruz) takes a position contrary to Novell's desires, the power becomes very important. Simply put it means Novell and not SCO calls the shots.

Now keep in mind that at the time the APA was negotiated, Novell had no idea (nor did its lawyers such as Mr. Braham) that Santa Cruz would sell out to Caldera nor that Caldera would hire incompetent management. One just does not assume or anticipate that. Neither did Mr Braham know that Novell might in time buy SuSE. And, of course, it was really the combination of both events that set up the situation where Novell and SCO do not see eye to eye.

But how does all of this affect SCO lawyers?

I am certain that SCO lawyers read the APA before they even quoted SCO a legal fee. And while at the time they did not know that Novell would buy SuSE, SCO lawyers were put on notice that Novell held this trump card. And that is exactly what this is, a trump card. A card that Novell can play at its own discretion if it relates to a SVRX licensee.

So for the potential litigation coming up between SCO and SCO lawyers the real question will be just what advise did SCO lawyers give SCO management regarding this ability of Novell to trump anything that SCO tried to pull in regard to SVRX licensees? They were on notice of those terms just as the judge is today. And you can bet your last dollar that he is very much focused upon those terms of the APA. It could wrap up two of his major cases in a hurry. And certainly SCO lawyers knew their flight out into the blue sky would be short indeed if Novell yanks the parachute off the backs of SCO just as they leave the plane. So what did SCO lawyers tell SCO? Don't worry about a parachute? We will catch you before you hit the solid ground? Don't worry you are over the soft ocean? Do not worry we have shining new shoes? You can just ignore the APA contract language, this is a nuisance suit anyway? Novell and IBM will quickly settle? Do not worry about the facts.

No do not think for a moment that I am defending SCO management here. These two groups of con men deserve each other. And before the dust all settles they are likely to be at each other's throat in court. They both like law suits, right? So when the stuff hits the fan, it may be a joy to watch. No dog in the fight and fight is ugly. What is there for a lawyer not to like? LOL

But, remember bankruptcy is pending. In my mind it is all but certain. I just do not see anyone coming up with fresh cash for SCO which may allow them to pay off Novell and avoid bankruptcy. Nor do I see the court ever reaching a decision that somehow the SUN and Microsoft license deals were exclusively a SCO license and not SVRX. Lock, stock and barrel is not longer the case. At least the shot and powder was retained by Novell.

And along comes a trustee in bankruptcy. I have mentioned this fellow (or most likely a law firm) a number of times. But, what is he going to do? And what are his responsibilities? Technically, the trustee works for the bankruptcy court. But, he acts to represent the creditors to make certain they get their due. He also acts for the benefit of the stockholders too although, stockholders take last and little is likely to be left. A trustee can also act to save or salvage a business if that can be done. But, what they do not do is engage in nuisance lawsuits. Remember that the trustee works for and reports to the bankruptcy court, a court of law. And nuisance law suits are frowned upon by all courts. If you have a legitimate legal claim, then fine. If not, any pending law suits are likely to be dispensed with post haste. Depending upon the timing, we might actually have a race to the courthouse between the Novell lawyers and the trustee in bankruptcy. Both may be rushing to get the suits against Novell and IBM, dismissed.

And why might that be?

Primarily that might be because a whole lot more is now known about these cases. Of course, nothing is new here for Novell, SCO, IBM or their lawyers. Even this declaration from Mr. Braham is “new” or some kind of a surprise. SCO lawyers saw this coming from day one. The very end of this deposition even says that no one from SCO asked him for his view on the APA. Well, why do you suppose that is? The answer that they knew what his views were. After all they were clearly expressed in the APA itself. So when did SCO lawyers know about this declaration? Day one. And that is what brings up the potential legal liability for SCO lawyers toward their client. Did SCO lawyers tell SCO management they were toast if Novell brings the APA before a judge? Remember way back when I expressed a lack of understanding why SCO sued Novell for slander rather than breach of the APA and ask the court to require Novell to complete the assignment of the copyrights? Remember that? Maybe SCO lawyers did not want to do that because they were still hoping their extortion plan would work. And admitting you do have the copyrights yet would nix the extortion. But, maybe SCO lawyers were trying to avoid litigating the APA in any way because they knew they would lose if they did. (Just act like the facts against you do not exist and hope it never gets to a judge.) SCO originally only sued for slander. And SCO originally only sued IBM for contract violations. And, of course, SCO never sued Red Hat at all. Red Hat, IBM and Novell had to bring these legal issues into the court room. SCO lawyers tried to avoid that all along. So nothing in this declaration by Mr. Braham is news to SCO lawyers. They knew it all along and put SCO into bankruptcy anyway. They put SCO into bankruptcy either by being completely incompetent or by deceit. And in my mind at least the trustee in bankruptcy is going to visit that proposition. The trustee is going to need to scare up some cash if he can. And when I use the term “scare up some cash” I mean by using the truth not deceit.

Do SCO stockholders have a claim against SCO management? Without a doubt. And I normally do not favor such legal actions as those brought by stockholders just because the stock went down and not up. But, this case is different. The very viability of SCO as a company was risked by key decision makers because they may have come out on top. And to make matters worse, money owe to Novell (or held in trust by SCO for Novell) was used to pad the lawyers in on the scheme or in on a scheme of their own.

Bankruptcy can really shake up this cheap card game. And it is not really a card game. Rather it appears to be convention of conmen all trying to mark each other as the fool. And there is not going to be much money left for the players to fight over. They owe Novell more than they have. They are likely to owe Novell more for the harm caused to Novell's property interests. And they are likely to owe IBM a pile as well. And then there is Red Hat and poor ole AutoZone?. SCO tried to step on DaimlerChysler? but could not even do that. And AutoZone? should never have had to even hire a lawyer.

So when and if it gets around to the trustee in bankruptcy hoping to settle some outstanding lawsuits, there are going to be plenty of reasons for claiming a walk away is a win. However, I do not see Novell walking away with anything short of all of the UNIX marbles. IBM may have settled for just getting it over. Red Hat can hardly win because the issue of the possible copyright violation is just unlikely to be decided upon by the court. It will not get that far. This declaration pretty much seals the copyrights with Novell. And that simply means SCO must sit down and shut up. Besides all their one time lawyers are taking instructions from Novell or being removed completely. Besides they have to worry about the liability of putting their client into bankruptcy due to incompetence or deceit. (You pick.) And that leaves AutoZone?. They only want to sell auto parts for your car.