The 1985 $ echo Newsletter Clarification On Derivatives Appears in the 1988 Chrysler Contract

Thursday, March 18 2004 @ 01:21 AM EST

Contributed by: PJ

There has been some debate about whether or not the two $ echo AT&T newsletters Novell put up on its website (attached to its February 6, 2004 letter) really meant to clarify the terms of the AT&T contracts so as to say that AT&T made no claim to derivative works if they contained none of their original code. That question appears to be resolved in Novell's (and IBM's) favor.

If you look at Exhibit A, attached to SCO's own complaint in the Daimler Chrysler case, the 1988 software agreement between AT&T and Chrysler, you find that the 1985 $ echo terms are incorporated into the later contract. Credit for first noticing this goes to Groklaw's dmscvc123.

The exact terms found in Clause 2.01 of the Chrysler agreement are these:

"AT&T-IS 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, solely for LICENSEE'S own internal business purposes and solely on or in conjuntion with DESIGNATED CPUs for such SOFTWARE PRODUCT. Such 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 SOFTWARE PRODUCT subject to this Agreement is treated hereunder the same as such 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 SOFTWARE PRODUCT.""

The Chrysler contract defines SOFTWARE PRODUCT like this:

"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-IS for a specific SOFTWARE PRODUCT are listed in the Schedule for such SOFTWARE PRODUCT. Certain SOFTWARE PRODUCTS available under this Agreement may contain materials prepared by other developers."

Darl, in his interview with Dan Farber was asked about the echo newsletter, and his response was:

"We'll be glad to take our contracts against the newsletter. OK? If you look at what the newsletter is claiming, it's claiming that you, in fact, own the derivative work. We've said that from the very first filing in the IBM case. IBM owns their derivative works. That's what the newsletter says. We're saying we have an easement through the back of the property."

The Chrysler contract shows that it's not a question of contract versus newsletter. It's contract as explained by newsletter and the clarification has just shown up incorporated into Chrysler's 1988 contract in the exact place indicated in the August 1985 newsletter. The newsletters and now the contract spelled out who owned modifications and derivative works, the very issues involved in the IBM case, and AT&T said they didn't own them. So where in the above paragraph or in the contract as clarified by the newsletters do you see an easement?

Me neither.

Just for review, here is what the April 1985 echo newsletter said:


"At the Business and Technical Seminars held March 3-4 and March 6-7, Dave Frasure, Sales Manager. Software Sales and Licensing, described several modifications that will be made to AT&Tís software contracts

"These changes are in response to direct feedback from AT&Tís licensees and are intended to make the contracts more responsive to the needs of the licensees. The following is a summary list of the changes

"Changes to the Software Agreement . . .

"Clarification of Ownership of Derived Works

"ē Language changes will be made to clarify ownership of modifications or derivative works prepared by a licensee."

Then in the August 1985 newsletter, the clarification was to the exact section we find in the Daimler Chrysler contract:

"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."

You'll recall that the newsletter described itself like this:

"$ echo is the newsletter published by the AT&T Software Sales and Licensing organization for licensees of UNIX* System V.

"Licensees for UNIX Software products and services are located throughout the world. Having a customer network this large poses a special problem in establishing effective communication lines. This newsletter is designed to make our organization more responsive to our customers' needs through a structured information dissemination medium.

"The purpose of $ echo is to reach all UNIX System V licensees through one defined medium. It serves as a consistent channel of communication to our licensees and keeps them abreast of any product announcements, policy changes, company business and pricing structures."

I'd have to say it just doesn't get any clearer than this.