The Dynix License Arrangements


July 20, 2006

I keep seeing the contractual terms applicable to the Dynix and Aix license arrangements being treated in various posts as if they are equivalent. I want to remind people that they are not the same. As regards Dynix, there is no side letter equivalent to the one entered into by AT&T and IBM when they agreed on the AIX license arrangements and as a consequence AT&T and its successors have a better claim to ownership and/or confidentiality with respect to M&C (and Sequent generated code) in Dynix then they do in respect to M&C (and IBM generated code) in AIX. (In fact, in the case of AIX, I believe such claims are non-existent primarily because of that side letter.)

The provisions in the Dynix SW Agreement that are relevant to rights in methods and concepts in Dynix start with S1.03 and 1.04 where SOFTWARE PRODUCT is defined essentially as including the SVRX source code that AT&T was providing to Sequent. However, in S2.01 of that agreement that definition of SOFTWARE PRODUCT is effectively extended by the words:

“Such right to use [the SOFTWARE PRODUCT] 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.”

Stopping here for a moment, one might say that, while it is not totally clear, AT&T would have a reasonable argument that if any code written by Sequent and inserted in Dynix embodied some method or concept developed by Sequent for Dynix, then AT&T owned it.

Section S7.06(a)of the same agreement reinforces this interpretation, or at least that section provides AT&T and its successors with a reasonably strong claim that M&C in Dynix whether also in SVRX or only in Dynix are to be kept confidential unless they come into the public domain otherwise than through Sequent’s action. The relevant part of that sections reads as follows:

“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 of such SOFTWARE PRODUCTS(including methods or concepts utilized therein) to anyone, except to employees of LICENSEE to whom such disclosure is necessary to the use for which rights are granted hereunder....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.”

AllParadox in one of his posts (#500) argued, if I understood him, that AT&T would have had no business purpose in restricting disclosure of licensee developed M&C (or verbatim code for that matter). I think AT&T could have argued that in 1984 when the Dynix license arrangements were entered into (there apparently was an earlier Dynix agreement but I have not seen it) there were other operating systems in the market (BSD 2.8, VAX, Coherent and even DOS) that potentially could, or, in fact, did compete with SVRX and it was in AT&T's interest to restrict dissemination of AT&T licensee developed M&C (and verbatim code) so as to reduce the possibility that these alternative systems would incorporate such M&C (and code) and thereby become more competitive to the detriment of AT&T's SVRX royalty stream.

In answer to this, people usually refer to the $Echo newsletters, especially to the wording in the August edition as follows “Section 2.01 - The last sentence was added to assure licensees that AT&T will claim no ownership in the software that they developed -- only the portion of the software developed by AT&T.” But if you look at that newsletter, this item is one of a number of listed changes AT&T is claiming that it is making to the SVRX license arrangements with its various licensees at least some of which, not being in the interest of the licensees, could not be made without their agreement. I believe that the relevant portions of the newsletter have to be interpreted either as AT&T making an offer, or as describing an offer being made by AT&T, to each of its licensees which would require an acceptance by a licensee before it became binding on AT&T vis a vis that licensee. There is no clear evidence in the public record that I am aware of indicating Sequent accepted the arrangements on offer.

Another answer that people make is to refer the various affidavits submitted by IBM attached to documents filed by it in its prior PSJ applications germaine to the issue of what rights AT&T thought they had to licensee generated code and M&C at the time. As I recall SCOX submitted at least one counter affidavit on the subject. Furthermore it is unclear whether any of that evidence is admissible in the face of paragraph 4 on the first page of the Dynix SW agreement. At least from my perspective I believe there is enough evidentiary conflict to get SCOX through the PSJ stage and on to trial if the issue becomes relevant.

A third partial answer that I have come up with is that the fact that there is no evidence in the public record that Novell or Old SCO (as successors to AT&T) objected to the public disclosure of an M&C in Dynix inherent in Sequent application for the RCU patent (5442758) in 1995. This is at least some evidence that is consistent with AT&T having no rights in Sequent created M&C.

Fortunately all of this may be now irrelevant insofar as M&C in Dynix are concerned as long as the Wells’ order is upheld. By refusing to provide code coordinates for its claims, SCOX has apparently lost any right to pursue IBM for wrongful disclosure of M&C in Dynix. SCOX must have felt there was nothing substantive worth pursuing in this area.

< EOM >

1:48:20 PM

Re: The Dynix License Arrangements

El Corton

< Stopping here for a moment, one might say that, while it is not totally clear, AT&T would have a reasonable argument that if any code written by Sequent and inserted in Dynix embodied some method or concept developed by Sequent for Dynix, then AT&T owned it. >

I suggest you review IBM's redacted memorandum [454] in support of PSJ on the contract claims, and the exhibits.

Original code written by Sequent is not a derivative work of System V, and is therefore not a "resulting material" subject to non-disclosure. SCO has invented a wholly new meaning of the phrase "derivative work" to suit its purposes. According to SCO, Dynix as a whole is a derivative work of System V. That is like saying that if you publish a collection of poems including works by Allen Ginsberg and Emily Dickinson, Ginsberg's works become derivatives of Dickinson's. It's idiocy.

If SCO had evidence that methods and concepts were taken directly from System V and contributed to Linux by IBM, it might be able to get its claim past this most basic hurdle of contract interpretation -- only to be struck down by IBM's estoppel and waiver arguments. However, as we've seen, SCO has no such evidence, so this isn't even an issue.

Furthermore, as IBM points out, the Side Letter to the AT&T-IBM agreement doesn't modify the terms of that agreement. It's merely a clarification. As such, it applies with equal force to the AT&T-Dynix agreement, which has the same terms.
< EOM >

4:40:45 PM

Source: Investor Village SCO Board [ ]

Copyright 2006