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Now the US Trustee Objects to the Patent Sale Too
Friday, November 30 2007 @ 02:01 AM EST

SCO doesn't seem to be fully applying themselves lately. Perhaps they are a bit distracted. You'd think they'd at least *try* to do their paperwork correctly. Maybe they figure, why bother? It's over. We're under a death sentence. York's lawyer said so. So since tomorrow we die, let's eat and drink and be merry. That, at least, is rational.

So that can't be it.

Whatever is the reason for these crazy SCO filings, the US Trustee has now filed another objection [PDF], this one to the proposed patent sale too. It must be hard to be a SCO lawyer. All the other lawyers in the office must tease them mercilessly. Even the paras are giggling, I'm guessing, as they type up yet another strange motion. Giggling or sending earnest memos to their bosses: "The software is prompting for the name of the proposed buyer, and I don't seem to have it. Should I contact the client? We can't submit it like this. We are missing the following necessary items..."

The trustee also would like a little bit more information, the same complaint Novell has, not enough specificity. As you know, SCO got a D minus in that subject in college in Utah in the IBM case, and now that they are trying for their masters in bankruptcy in Delaware, they still struggle with it. Maybe if they had a One Laptop Per Child laptop, they could focus better. Anyway, the Trustee has noticed the problem too and suggests the following:

The U.S. Trustee submits that the Debtors must better explain the adequacy of the sale process before this Court can fully evaluate the relief requested.

Like they can. And what's with the bonuses, the objection asks? Who gets those? Why? What are the terms? For that matter, where is the engagement agreement between Ocean Tomo and The SCO Group? Maybe 363 Group can fax it right over. Joke. Joke. Technically, SCO could just provide all the information everyone is asking for, but if they wanted to do that, or could, they would have already, I expect.

Their lawyers have to know it's not likely that a deal will be approved where no one knows who is buying what, there's no paperwork attached, no clear information about the worth of the patent, no specifics on how it was marketed, and to top it all off, here's what else the US Trustee has noticed, in the footnote:

The U.S. Trustee notes that The SCO Group, Inc. is party to the retention agreement with Ocean Tomo not Cattleback. The U.S. Trustee is unaware of any application by the Debtors to employ Ocean Tomo as a professional under 11 U.S.C. 327(a).

Uh oh. That's an oops, for real. See what I mean? They just aren't trying. Wait until Mr. McMahon finds out Ocean Tomo and The 363 Group appear to be joined at the hip, yet are bidding against one another, or acting like it.

So why isn't SCO being more careful? Their lawyers are really competent. So that's not the problem. It's almost like someone is holding a gun to their heads and forcing them to file this absolutely loopy stuff that no one can possibly believe will be approved. Here's the docket entry:

11/29/2007 - 236 - Objection to Debtors' Motion for Approval of Incipient Controversy (related document(s)194 ) Filed by United States Trustee (Attachments: # 1 Certificate of Service) (McMahon Jr., Joseph) (Entered: 11/29/2007)

I guess there is one other possibility. Do you remember how Boies Schiller in the SCO v. IBM litigation used to ask for the sun and the moon and the stars in US District Court in Utah, when all they really wanted was one star? And by asking for outrageous things and fighting for them tooth and nail, they'd lose, be denied the sun and the moon and all of the stars but one, and there they'd be, holding one twinkling star. Ah, the goode olde dayes, when SCO was merely outrageous.

Anyway, Mr. McMahon says he reserves the right to amend this objection when more crazy stuff spills out from SCO, either before or during the hearing on December 5. He doesn't put it quite like that:

The U.S. Trustee reserves the right to amend and/or supplement this objection at or prior to the hearing on the Motion.

My translation: "What in the world will they try next? I'm keeping my options open, so when they provide the details I can run to the podium and object some more." What is this? His sixth objection? Tenth? Anyone counting? The hearing should have a certain Buster Keaton quality to it, with SCO as Keaton in that scene where the he opens the door to a house and walks in, closes the door behind him, and then the entire house falls down all around him. I've read that Keaton had to stand on the precise spot, marked by a nail, or the house would have crushed him to death. Fearless. Like these Utah cowpokes, who are boldly spinning some mighty strange yarns in Delaware.

**********************************

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re

THE SCO GROUP, INC., et al.,

Debtors.
Chapter 11

Case Number 07-11337 (KG)
(Jointly Administered)

Hearing Date: December 5, 2007 at 10:00 a.m.

OBJECTION OF THE UNITED STATES TRUSTEE TO THE
DEBTORS' MOTION FOR APPROVAL OF INCIPIENT CONTROVERSY
(DOCKET ENTRY # 194)

In support of her objection to the Debtors' motion for approval of incipient controversy (the "Motion"), Kelly Beaudin Stapleton, United States Trustee for Region 3 ("U.S. Trustee"), by and through her counsel, avers:

INTRODUCTION

1. Under (i)28 U.S.C. 1334, (ii) (an) applicable order(s) of the United States District Court for the District of Delaware issued pursuant to 28 U.S.C. 157(a), and (iii) 28 U.S.C. 157(b)(2), this Court has jurisdiction to hear and determine the Motion.

2. Under 28 U.S.C. 586, the U.S. Trustee has an overarching responsibility to enforce the laws as written by Congress and interpreted by the courts. See United States Trustee v. Columbia Gas Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, 295-96 (3d Cir. 1994) (noting that U.S. Trustee has "public interest standing" under 11 U.S.C. 307 which goes beyond mere pecuniary interest); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498, 500 (6th Cir. 1990) (describing the U.S. Trustee as a "watchdog").

1

3. Under 11 U.S.C. 307, the U.S. Trustee has standing to be heard on the Motion and the issues raised in this objection.

4. The U.S. Trustee objects to the Motion on the grounds identified below.

5. In addressing whether the proposed settlement should be approved, this Court should consider whether the Debtors' estates are receiving fair value in exchange for the release of fraudulent transfer liability. The "fair value" analysis hinges upon, among other factors, an understanding of the intellectual property being sold and whether the process employed by the Debtor/Cattleback Intellectual Property Holdings, Inc. ("Cattleback") was designed to elicit the highest and best offer for the patent. In the Motion, the Debtors provide the title of the patent and, in three abbreviated sentences, describe the marketing and sale process (see Mot. 9 - 11). The U.S. Trustee submits that the Debtors must better explain the adequacy of the sale process before this Court can fully evaluate the relief requested.

6. The engagement agreement between Ocean Tomo, LLC and The SCO Group, Inc. was not appended to the Motion.1 Similarly, while the Debtors indicate that Cattleback is obligated to pay $45,000 in bonuses to (i) the inventor of the patent and (ii) certain SCO employees, neither the terms under which the bonuses are payable nor the persons to whom the bonuses are payable are disclosed in the Motion. Again, in order to evaluate the relief requested by the Debtors in the Motion, the aforementioned information should be disclosed.

7. The U.S. Trustee reserves the right to amend and/or supplement this objection at or prior to the hearing on the Motion.

2

Respectfully submitted,

KELLY BEAUDIN STAPLETON
UNITED STATES TRUSTEE

BY: /s/ Joseph J. McMahon, Jr.
Joseph J. McMahon, Jr., Esquire (# 4819)
Trial Attorney
United States Department of Justice
Office of the United States Trustee
[address, phone, fax]

Date: November 29, 2007

3

1 The U.S. Trustee notes that The SCO Group, Inc. is party to the retention agreement with Ocean Tomo not Cattleback. The U.S. Trustee is unaware of any application by the Debtors to employ Ocean Tomo as a professional under 11 U.S.C. 327(a).


  


Now the US Trustee Objects to the Patent Sale Too | 300 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections_Here_please
Authored by: complex_number on Friday, November 30 2007 @ 02:14 AM EST
You know the rules

[ Reply to This | # ]

Newspicks Topic
Authored by: complex_number on Friday, November 30 2007 @ 02:15 AM EST
...

[ Reply to This | # ]

OT Notes and Discussions
Authored by: complex_number on Friday, November 30 2007 @ 02:17 AM EST
You know the rules...

[ Reply to This | # ]

If Darl got his wife and kids out of the country
Authored by: kawabago on Friday, November 30 2007 @ 02:39 AM EST
I bet I know what will happen next!

[ Reply to This | # ]

Now the US Trustee Objects to the Patent Sale Too
Authored by: Anonymous on Friday, November 30 2007 @ 02:48 AM EST
Re

> Wait until Mr. McMahon finds out Ocean Tomo and The
> 363 Group appear to be joined at the hip, yet are
> bidding against one another, or acting like it.

Just because something smells fishy, it doesn't necessarily mean that SCOs
behind it.

Fraudsters often target stupid people, and well, let's just say that being as
annoying as a mosquite doesn't make SCO clever.

Could just as well be that O-T and 363 are colluding against SCO rather than
colluding with SCO.

[ Reply to This | # ]

Demanding the outrageous
Authored by: jmc on Friday, November 30 2007 @ 03:16 AM EST
I'm sure PJ is right about the "sun moon and stars" analogy.

I've thought for a long time that the way SCO (and quite a few other people I
can think of) gets its way is to demand the absolutely outrageous as a way to
end up "compromising" on the merely grossly unreasonable.

[ Reply to This | # ]

    smells like, looks like, tastes like ... probably is
    Authored by: Anonymous on Friday, November 30 2007 @ 04:15 AM EST
    many nouns apply in this circumstance...

    Your trustee is certainly polite.

    cheers,
    Charles from Oz

    [ Reply to This | # ]

    Buster Keaton
    Authored by: Anonymous on Friday, November 30 2007 @ 04:31 AM EST
    Please don't sully the memory of Buster Keaton by suggesting he could be played
    by SCO. That's just sooo wrong.

    [ Reply to This | # ]

    Great Post PJ!
    Authored by: arnotsmith on Friday, November 30 2007 @ 04:37 AM EST
    I think you're enjoying this. :)

    [ Reply to This | # ]

    Boilerplate paragraphs
    Authored by: Khym Chanur on Friday, November 30 2007 @ 04:45 AM EST

    I would assume that all BK judges and BK lawyers would be aware of the facts stated in the first three paragraphs of the complaint, so why are they included? Does a motion from the trustee not carry legal weight unless those facts are spelled out in every motion s/he makes?

    ---
    Give a man a match, and he'll be warm for a minute, but set him on fire, and he'll be warm for the rest of his life. (Paraphrased from Terry Pratchett)

    [ Reply to This | # ]

    Now the US Trustee Objects to the Patent Sale Too
    Authored by: Steve Martin on Friday, November 30 2007 @ 06:58 AM EST

    The U.S. Trustee notes that The SCO Group, Inc. is party to the retention agreement with Ocean Tomo not Cattleback. The U.S. Trustee is unaware of any application by the Debtors to employ Ocean Tomo as a professional under 11 U.S.C. 327(a).

    Forgive me, but I'm at a bit of a loss to understand why the Trustee is noting this at all. According to The SCO Group's Court filing re: their "incipient controversy" with Cattleback, they retained Ocean Tomo in July of this year, two months pre-petition. Why should TSG have had to apply for permission to retain them?

    ---
    "When I say something, I put my name next to it." -- Isaac Jaffee, "Sports Night"

    [ Reply to This | # ]

    eat and drink and be merry.
    Authored by: Anonymous on Friday, November 30 2007 @ 07:48 AM EST
    I want that Victoria's Secret model under my Christmas tree for Christmas.

    [ Reply to This | # ]

    • topical? - Authored by: Anonymous on Friday, November 30 2007 @ 11:08 AM EST
      • topical? - Authored by: Anonymous on Friday, November 30 2007 @ 02:40 PM EST
        • topical? - Authored by: Anonymous on Friday, November 30 2007 @ 04:02 PM EST
          • Tropical!!!! - Authored by: Anonymous on Friday, November 30 2007 @ 06:10 PM EST
            • Tropical!!!! - Authored by: Anonymous on Friday, November 30 2007 @ 08:40 PM EST
          • topical? - Authored by: Anonymous on Friday, November 30 2007 @ 08:41 PM EST
    Slam dunk evidence of bad faith: just dismiss the petition
    Authored by: Anonymous on Friday, November 30 2007 @ 08:01 AM EST

    Is there such a thing as circumstantial evidence of bad faith? Or
    does it have to fit a precise definition? Clown suits don't count?

    [ Reply to This | # ]

    Now the US Trustee Objects to the Patent Sale Too
    Authored by: Anonymous on Friday, November 30 2007 @ 08:28 AM EST
    PJ, your stated that "SCO got a D minus in that subject in
    college" when talking about specificity. Are you even sure
    they made it that far? Sounds like a grade school type of
    problem to me.

    [ Reply to This | # ]

    Prior art
    Authored by: Anonymous on Friday, November 30 2007 @ 08:32 AM EST
    There is an old Groklaw article, with reader comments suggesting prior art:
    http://www.groklaw.net/article.php?story=278

    [ Reply to This | # ]

    Prediction: more objections to follow from the trustee
    Authored by: Anonymous on Friday, November 30 2007 @ 08:41 AM EST
    I'm going to go out on a limb here, and predict that the trustee will be filing
    many more objections to SCO's filings.

    It's pretty bold, I know, but I'm quite confident in my conjecture.

    bkd

    [ Reply to This | # ]

      Now the US Trustee Objects to the Patent Sale Too
      Authored by: Anonymous on Friday, November 30 2007 @ 08:43 AM EST
      What does this phrase mean?

      "... whether the Debtors' estates are receiving fair value in
      exchange for the release of fraudulent transfer liability."

      [ Reply to This | # ]

      What's With The Bonuses - Conrad Black To Get 7 Years In Prison For Fraudulent Non Compete Bonus
      Authored by: Anonymous on Friday, November 30 2007 @ 08:54 AM EST
      "And what's with the bonuses, the objection asks?"

      Conrad Black who orchestrated and was convicted of fraudulent non-compete
      bonuses; will likely get 7 years in prison according to a recent sentencing
      report (although he is eligible for 35 years!)

      http://www.bloomberg.com/apps/news?pid=20601082&sid=aDXoLab0woBo&refer=c
      anada

      [ Reply to This | # ]

      Looks to me like the Bankruptcy Court Gets It.
      Authored by: rsteinmetz70112 on Friday, November 30 2007 @ 10:40 AM EST
      Looks to me like the Judge and the Trustee have SCO figured out. They understand
      SCO is hiding out in Delaware from the Judge in Utah and they don't seem to be
      in any mood to play games.

      I'd bet they have seen most of this before. Bankruptcy court is full of people
      and companies hiding assets and all sorts of other stuff from the Court and
      their creditors.I's imagine it will make everyone involved suspicious and
      cynical.

      The Trustee has objected to all of SCO's maneuvers and the Judge has granted
      Novell's death motion.

      The Bankruptcy court has more power than the District court to short circuit
      stuff, partly because the debtor has come to the court asking it to bail them
      out.

      The speculators are circling like the vultures they are.

      ---
      Rsteinmetz - IANAL therefore my opinions are illegal.

      "I could be wrong now, but I don't think so."
      Randy Newman - The Title Theme from Monk

      [ Reply to This | # ]

      Deliberate vagueness?!
      Authored by: Anonymous on Friday, November 30 2007 @ 11:39 AM EST
      "The U.S. Trustee submits that the Debtors must better explain the adequacy of the sale process before this Court can fully evaluate the relief requested."

      What is required to explain the "adequacy of the sale process"?! Or, has the U.S. Trustee started to be as vague, as SCO likes to be, like a you-better-find-out-yourself"-sort-of-kind-of-attitude? I didn't see a reference to any tests.

      What do you think?




      ---
      IMANAL - I'M Absolutely Not A Lawyer

      [ Reply to This | # ]

      WSJ - Judges tackle "foreclosure" mill
      Authored by: Anonymous on Friday, November 30 2007 @ 12:01 PM EST
      An article in todays WSJ (paper edition, sorry no link) on lawyer firms filing
      false or shoddy motions. Sanctions in some cases.

      Law firms handling foreclosures on behalf of mortage lenders use
      "software" to complete the forms. In some cases the listed creditor
      does not have the proper forms to show ownership of the mortage, in some cases
      the wrong person is cited, and other errors.

      An interesting read, considering the "loopy" motions being filed.

      [ Reply to This | # ]

      Now the US Trustee Objects to the Patent Sale Too
      Authored by: Anonymous on Friday, November 30 2007 @ 12:32 PM EST

      "... That, at least, is rational"

      "So that can't be it."

      PJ, I do think you are going to have to add "humorist" to you list of credentials.

      PS: or maybe, you're just a realist.

      [ Reply to This | # ]

      when they provide the details
      Authored by: Yossarian on Friday, November 30 2007 @ 12:45 PM EST
      IMO the right word is "if", not "when".

      Anyway, if SCO will provide more details then what's wrong
      with the US Trustee asking the judge something like "your
      honor, those details came pretty late and I need at least a
      week to check how they change the situation, so can you
      please postpone this hearing"?

      I mean, lawyering is the art of fine print, and it takes
      time to check the fine print. So the court will probably
      grant such a request.

      [ Reply to This | # ]

      Not Funny - Now the US Trustee Objects to the Patent Sale Too
      Authored by: Anonymous on Friday, November 30 2007 @ 02:25 PM EST
      "Even the paras are giggling,..."

      PJ,

      I'm willing to bet, that were you a para at a legal firm that was desperate
      enough to make the motions you find so odd, you would be far from giggling.
      Probably in fact, hoping against hope, that you would have a job next year.
      This is going to be a very big fiasco, and I imagine there will be some house
      cleaning after this is done. The law firm took a very big gamble when it agreed
      to represent SCO, and I have a suspicion, will lose money on the deal. It can't
      help their reputation any.

      [ Reply to This | # ]

      Why is SCOX being quiet on the ruling granting Novell's motion?
      Authored by: BobinAlaska on Friday, November 30 2007 @ 03:53 PM EST
      Did I miss SCOX saying anything about Novell winning the motion to unstay? I
      have been watching but more eyes are useful.

      ---
      Bob Helm, Juneau, Alaska

      [ Reply to This | # ]

      "Whatever is the reason for these crazy SCO filings,"
      Authored by: Anonymous on Friday, November 30 2007 @ 06:48 PM EST
      Well.... ummmmm lets see. SCO floats a trial balloon. If Bankruptcy
      Judge/Trustee doesn't object - then indirectly Bankruptcy Judge/Trustee says its
      okay; then it's not fraudulent (The Bankruptcy Judge/Trustee would have stopped
      "it"- if "it" was illegal.)

      I gather there is NO fraud in presenting a fraud for approval versus doing
      something that is fraudulent.

      So what does SCO have to lose? Nothing! At the same time, everything SCO is
      doing is stretching out the time to spend Novell's money and/or to bleed
      Novell/Open Soutce in the market place.

      [ Reply to This | # ]

      Is this whole craziness a defense for an expected criminal trial?
      Authored by: mjscud on Friday, November 30 2007 @ 10:56 PM EST
      It occurs to me that the purpose of this lawsuit, with all its bizarre motions
      on the part of SCO, may be explicable as a prepared defense against a future
      criminal fraud trial.

      Imagine that years ago Ralph Yarro realized that IBM was not going to settle but
      rather fight to the finish. Imagine that stock manipulation had occurred, and
      that a fraudulent threat had been made to IBM and perhaps other companies.
      Imagine you have on hand some venal and useful fools, the McBride brothers.

      Then throwing away other people's money, and some of your own, on a lawsuit that
      you knew had no reasonable chance of winning, might make sense. You've made a
      lot of money already on the sale of stock, and you want to enjoy it out of
      prison. So drag out the inevitable for a long time, giving yourself the defense
      against fraud of, "It wasn't fraud, I didn't intend to deceive the
      investors I sold the stock to, and as proof I lost some money also."

      Does this make sense? Could this be an effective defense against a charge of
      fraud? Do the laws against fraud also prohibit deceiving others based on a
      foolish and reckless disregard of the truth, or do you actually have to
      knowingly deceive?

      Well yes, I sold them a fool's hope, but after all, I am a fool?


      ---
      Even a fool, when he keeps silent, is considered wise. Proverbs 17:28

      [ Reply to This | # ]

      Now the US Trustee Objects to the Patent Sale Too
      Authored by: Anonymous on Saturday, December 01 2007 @ 03:19 AM EST
      curious - since the case in partially back in Utah, can Novell bring up the
      patent in Kimball's court to see if they have patented some of their copywrite
      material?

      [ Reply to This | # ]

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