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SCO Wants to Sell Java Patent and (Mostly) Pay the Professionals
Monday, March 29 2010 @ 11:06 PM EDT

SCO Chapter 11 Trustee Edward Cahn has now reported to the bankruptcy court that he's closed on the loan from Ralph Yarro and his friends, and now Cahn wants to pay most of the bills in the bankruptcy from SCO's numerous professionals. And he wants to sell the Java patent, since SCO's never used it and has no use for it going forward. He has a buyer, Liberty Lane, LLC, and so he asks the court to approve the sale to Liberty Lane "or another higher and better bidder." That seems unlikely, in that they claim to have shopped the patent to around 40 potential purchasers. Liberty Lane is offering $100,000.

Cahn says he "will pay 80% of fees and 100% of expenses to all of the estates' professionals who have filed (i) monthly and/or interim fee applications for such fees and expenses and (ii) certifications of no objections with respect thereto pursuant to the Interim Compensation Order", but doesn't yet want to pay the last 20% of PSZ&J's bill "until such time as the Trustee has reviewed and evaluated the reasonableness of all fees and expenses generated by the Debtors’ and these estates’ professionals".

So that's where the loan goes, for starters. He's not singling them out, by the way, except for the fact that he wants to wait until all the final bills are in, so he can evaluate reasonableness in a context, and so far they are the only ones that have filed a final bill.

Here are the filings:

03/23/2010 - 1095 - Limited Objection to and Reservation of Rights With Respect to Final Application for Compensation and Reimbursement of Expenses of Pachulski Stang Ziehl & Jones LLP, as Co-Counsel to the Debtors, for the Period from September 14, 2007 through November 16, 2009 (related document(s) 1076 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al. (Fatell, Bonnie) (Entered: 03/23/2010)

03/23/2010 - 1096 - Application for Compensation (Twenty-Second Interim) of Tanner LC for the Period From October 1, 2009 Through October 31, 2009 Filed by Tanner LC. Objections due by 4/12/2010. (Attachments: # 1 Notice # 2 Exhibit A # 3 Certificate of Service) (Fatell, Bonnie) (Entered: 03/23/2010)

03/26/2010 - 1097 - Certificate of No Objection Re: Fourth Monthly Fee Application of Ocean Park Advisors, LLC, Financial Advisor to the Chapter 11 Trustee of the SCO Group, Inc., et al., for Compensation and Reimbursement of Expenses for the Period of January 1, 2010 through January 31, 2010 (related document(s) 1071 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 03/26/2010)

03/26/2010 - 1098 - Monthly Application for Compensation (Fifth) for the Period of February 1, 2010 Through February 28, 2010 Filed by Ocean Park Advisors, LLC. Objections due by 4/16/2010. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B # 4 Certificate of Service) (Fatell, Bonnie) (Entered: 03/26/2010)

03/29/2010 - 1099 - Motion to Approve Sale // Motion of the Chapter 11 Trustee for Order Under 11 U.S.C. Sections 105(a) and 363 and Fed. R. Bankr. 2002 and 6004 (A) Approving the Sale of the IP Asset Free and Clear of All Liens, Claims Interests, and Encumbrances Pursuant to 11 U.S.C Section 363 and (B) Granting Related Relief Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Hearing scheduled for 4/20/2010 at 04:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 4/13/2010. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B # 4 Exhibit C # 5 Exhibit D # 6 Exhibit E # 7 Certificate of Service) (Fatell, Bonnie) (Entered: 03/29/2010)

Cahn says he doesn't think a public auction is necessary. They'll put an ad in a Salt Lake City newspaper, and he asks that the private sale be stamped OK by the court to go forward. If anyone bids, and is demonstrated to be a good faith buyer, then they'll have an auction on April 19, the day before the hearing on this motion. Oh, and normally after an order to sell issues, you wait 14 days, but Cahn asks the court to waive that requirement.

And who is Liberty Lane LLC? According to Exhibit B [PDF], they have an office in San Diego, CA but are a Delaware LLC. Exhibit D says Liberty Lane is a company affiliated with Allied Security Trust I, and if that is this patent-protection (from trolls) company, that might not be half bad. Google and HP are members of Allied. At least they'd keep it out of the hands of the litigation lizards. That's Allied's purpose, to dry up patent trolling as a "business" by buying up patents that might be used that way. And Exhibit E [PDF] indicates they are one and the same, in that the letter of intent shows the same name as CFO, Kerry Hopkin.

I don't care how much Microsoft wants us to hate Google. I love those guys.

Update: I had never heard of Perk-Up, so I did some research. Here's what it was, a technology announced at SCOForum 1999. Are they selling it as an IP asset, a technology that happens to have a patent in it, instead of just a stand-alone patent? The buyer isn't in the software business and just wants the patent, presumably. Might it be because Ocean Park gets more money if they sell an IP asset instead of a stand-alone patent? I hope they clarify this at the hearing, because we don't know the answer. We're puzzling over the various references to the proposed sale, as being in one place called a sale of a stand-alone patent and in others as an IP Asset, Perk-Up, in others.

Update 2: Allied describes itself in a press release regarding settling litigation with Limelight like this:

About Allied Security Trust AST ( www.alliedsecuritytrust.com : www.alliedsecuritytrust.com ) is a member-owned Delaware Statutory Trust that identifies and analyzes high-technology patents being sold on the market, circulates those to its 16 member companies (each with annual revenues US $1 billion), and combines funds of interested member companies to purchase patents. It then sells the patents subject to licenses granted to those members, with proceeds returned to the members that funded the purchase. To date, it has invested US $40M to purchase 400 patents. For patent portfolios that have been sold by the Trust or are currently on the market, 82% of the money originally invested by Trust members to obtain their patent license has been returned to them at the time the patents are sold, making the Trust by far the most economical collaborative mechanism in the world for members to obtain licenses to patents that may otherwise fall into the hands of an adversarial party.
Note this from the body of the release:
As a result of the agreement, Limelight Networks, Twister Investments, and Allied Software Trust (AST) have agreed to execute a Stipulation of Dismissal with Prejudice for the purpose of dismissing with prejudice the declaratory judgment action Limelight Networks, Inc. v. Allied Security Trust and Twister Investments, LLC, United States District Court, District of Arizona, Case No. 2:10-cv-00585-NVW.

"Limelight respects AST's goals and its charter, and we are pleased to bring this matter to a rapid and mutually agreeable resolution," said Philip Maynard, chief legal officer, Limelight Networks, Inc.

"As a purely defensive organization helping to minimize the exposure of operating companies to adversarial patent holders, we are appreciative of Limelight's efforts to find a quick and mutually agreeable resolution," responded Dan McCurdy, chief executive officer, Allied Security Trust.


  


SCO Wants to Sell Java Patent and (Mostly) Pay the Professionals | 345 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections (if any needed) here please
Authored by: nsomos on Monday, March 29 2010 @ 11:27 PM EDT
Please place any needed corrections in this
corrections thread. It would be helpful
if the title could be a quick summary ...
perhaps something like

wrong->right

[ Reply to This | # ]

SCO Wants to Sell Java Patent and (Mostly) Pay the Professionals
Authored by: Anonymous on Monday, March 29 2010 @ 11:41 PM EDT
So they'll sell it prior to the hearing? Um. Did I miss an intermediate step, or something?

That seems to be the way it's done in bankrupcy court - you agree the deal then ask the court for approval. If the court says no, then the deal doesn't happen.

Disclaimer: Everything I know about bankruptcy law I learned on Groklaw.

[ Reply to This | # ]

Java Patent Income
Authored by: Anonymous on Monday, March 29 2010 @ 11:43 PM EDT
Do I remember correctly that Ralph gets this $100K since it's a piece of his assets that are being sold? Nice deal! -wjarvis

[ Reply to This | # ]

off-topic thread here please ...
Authored by: nsomos on Monday, March 29 2010 @ 11:47 PM EDT
Please follow posting guidelines.
Try to be off-topic for this story,
while being generally on-topic for Groklaw.

[ Reply to This | # ]

News Picks comments thread
Authored by: nsomos on Monday, March 29 2010 @ 11:49 PM EDT
Place posts related to news picks here please.
Don't make us guess which bit of news you are posting about,
but instead at least give us the title of that News Pick.

Thanks.

[ Reply to This | # ]

A dumb question...
Authored by: Anonymous on Tuesday, March 30 2010 @ 12:15 AM EDT
Since SCO converted millions of dollars that belonged to Novell, how is it ever
going to pay that back? Doesn't it have to be paid before any of the other
creditors in the bankruptcy?

How can law firms, etc. continue to get their pound of flesh while Novell gets
next to nothing (the small fraction of what they are owed, which is already in
escrow)?

[ Reply to This | # ]

The vultures have almost finished picking the carcase clean
Authored by: Anonymous on Tuesday, March 30 2010 @ 12:25 AM EDT
Bankruptcy = the process whereby a company is wound up and its assets are
distributed to lawyers.

[ Reply to This | # ]

40 potential purchasers
Authored by: SpaceLifeForm on Tuesday, March 30 2010 @ 12:30 AM EDT
I'll bet they had more than that.
All they had to do was ask everyone in their office NCAA bracket pool.

Legitimate purchasers? That's another story.

I have my doubts about the patent.
Don't read it if you think you will get tainted.
Not likely. It is Gobbledygook.

---

You are being MICROattacked, from various angles, in a SOFT manner.

[ Reply to This | # ]

SCOXQ.BK don't know what "sale" means
Authored by: SirHumphrey on Tuesday, March 30 2010 @ 01:08 AM EDT
I mean, lets be sensible here. Why would you diverge from a tried and true
method? If SCO (or whatever they call themselves in 10 years time) word it
correctly, someone who is the aunt of a completely uninvolved family member who
overheard one side of an unrelated conversation, will be able to launch a
lawsuit against the estate of Judge Cahn, based on the use of an allegedly
ambiguous font, which when held at certain angles, fails the Pauli Exclusion
Principle for Schrodinger-divergent meta-intent, rendering a perpetually
differing, non-binding interpretation mechanism upon the semantic framework.

Now that's worth patenting!

[ Reply to This | # ]

EETimes on Allied Security Trust I
Authored by: IMANAL_TOO on Tuesday, March 30 2010 @ 01:27 AM EDT
From EETimes in 2008:
""We are fundamentally a defensive agency procuring patents on behalf of our members," said Brian Hinman, chief executive of Allied. "We are not an investment vehicle, and our objective is not to make money," he added." [...]

Allied's members include Cisco Systems, Ericsson, Google, Hewlett-Packard and Verizon and six other companies who do not want to be named. As many as three other companies are expected to become members in the next 30 days, said Hinman.

"I am interested in only the patents that are strategic or potentially problematic for a subset of our members," said Hinman, who refused to disclose the number of patents he has bought or sold since the group was formed with four members in March 2007.

Each company puts $5 million into an escrow account used as working capital to buy patents that members can then license.


Doesn't sound all that bad.

I am not sure what their list of patents may have been worth at each stage, but the Allied Security Trust I list of patents owned by them at least once is fairly long - http://www.alliedsecurity trust.com/index-7.html and http://www.alliedsecurit ytrust.com/index-7b.html.


---
______
IMANAL


.

[ Reply to This | # ]

Hmm. What does this say about their case against Novell?
Authored by: jbb on Tuesday, March 30 2010 @ 04:44 AM EDT
Why would Judge Cahn make such a move a week before SCO will be making millions of dollars on their Slander of Title claim and right before investors come flocking back to them because they've established once and for all that they own the Unix copyrights fair and square?

Why on earth would anyone accept 80 cents on the dollar when they can just wait a week and get the full payment after SCO is rolling in dough from their big win? Isn't it rather underhanded of Cahn to offer to underpay the professionals like this just days before SCO's big windfall? Why on earth would he try to rip these people off like that? It doesn't seem very honorable.

I'm afraid I might just have to change my sig to:

Crazy means never having to say you're sorry.


---
You just can't win with DRM.

[ Reply to This | # ]

And then Chapter 7?
Authored by: kh on Tuesday, March 30 2010 @ 06:39 AM EDT
No more money, little income. Chance of rehabilitation?

[ Reply to This | # ]

Allied Security Trust
Authored by: hAckz0r on Tuesday, March 30 2010 @ 06:39 AM EDT
I only hope this is true.

Google, Cisco, and others band together against patent trolls[cnet.com]

The group, called the Allied Security Trust, is a bit like the open-source friendly Open Invention Network, but appears to have more cash at its disposal.

"Coalition for Patent Fairness" morphs into Allied Security Trust? [ipbiz.blogspot.com]

Tech companies have tried various ways to protect themselves, including investing in Intellectual Ventures LLC, a patent-holding firm founded by former Microsoft Corp. executive Nathan Myhrvold. The companies provide money to help Mr. Myhrvold buy patents, and he in turn grants them a license to his portfolio. But some in the tech industry fear Mr. Myhrvold's venture, which has collected thousands of patents in areas such as networking and software, may itself become an aggressive patent enforcer down the road. Mr. Myhrvold has said litigation isn't part of IV's strategy, but hasn't ruled it out.

Maybe Cahn is not as evil, or cool-aid-drinking, as we might tend to believe, or at least he is an equal opportunity seller or assets. Frankly I would think that some more evil organization might have tried a grab of this IP just to see what mayhem they could produce from it, but here it seems to be a little less threatening to people that care about this kind of patent. It doesn't affect Linux, but hey, its a step in the right direction I would think. The fewer patents available for lawsuits the better.

---
DRM - As a "solution", it solves the wrong problem; As a "technology" its only 'logically' infeasible.

[ Reply to This | # ]

OPA's Grand tour of Europe
Authored by: _Arthur on Tuesday, March 30 2010 @ 08:32 AM EDT
Judge Cahn, SCO trustee and acting CEO, sent 2 of OPA professionals to
Germany and UK, to discuss various matters with the heads of SCO
subsidiaries.

The trip cost:
$17.4K in direct costs (plane tickets, hotels, restaurant, taxis)
$16.6K in paid travel time
$25K in meetings

[ Reply to This | # ]

It appears to me...
Authored by: jbeadle on Tuesday, March 30 2010 @ 08:40 AM EDT
... that Mr. Cahn is liquidating the business while it's still in Chapter 11.

Just saying...

Thanks,
-jb

.

[ Reply to This | # ]

Japanese website on "ASTI"
Authored by: PJ on Tuesday, March 30 2010 @ 10:47 AM EDT
Please don't copy and paste entire articles.
It's a copyright issue, so I had to remove it. Thanks.

[ Reply to This | # ]

Allied Security Trust == Buyer of the "Cattleback" patent
Authored by: Anonymous on Tuesday, March 30 2010 @ 11:00 AM EDT
Allied Security Trust was also the buyer of the "Cattleback" remote administration patent.

It was directed through "Black Maple", but the USPTO Assignments database records a simultaneous Assignment to AST 1.

My years old Groklaw comments provides the source links for the ultimate assignment to AST

Clicky for USPTO assignments of patent number for AST purchase of the SCO patent.

[ Reply to This | # ]

Something I don't understand
Authored by: Tufty on Tuesday, March 30 2010 @ 11:11 AM EDT
If they sell an asset at a loss would it not be better to retain the asset as it
may make the company a better sales prospect by actually having something
worthwhile in it?

---
Linux powered squirrel.

[ Reply to This | # ]

What exactly is "the Java patent"?
Authored by: Anonymous on Tuesday, March 30 2010 @ 11:28 AM EDT
Does anybody know exactly what this patent is about?

[ Reply to This | # ]

The waiting impatiently for the verdict thread
Authored by: Anonymous on Tuesday, March 30 2010 @ 11:46 AM EDT
Waitng and clock watching!

I know it could take days if the jury so wishes but even so ...

phantomjinx

[ Reply to This | # ]

Microsoft and Hate
Authored by: The Mad Hatter r on Tuesday, March 30 2010 @ 12:05 PM EDT

I don't care how much Microsoft wants us to hate Google. I love those guys.
Generally if Microsoft is trying to convince me to hate someone or something, I support that someone or something.

The Enemy of my enemy...

---
Wayne

http://madhatter.ca/

[ Reply to This | # ]

Advertise in paper?
Authored by: MikeA on Tuesday, March 30 2010 @ 12:58 PM EDT

Does it seem odd to only advertise the sale of a Java patent in a local city paper? It's not like Salt Lake City is the crossroads of the world's computer industry.

Or is it some sort of technical bankruptcy requirement that sales of assets have to be "advertised", and this is just being done to meet that requirement?

---
---
“'Unifying UNIX with Linux for Business' are trademarks or registered trademarks of Caldera International, Inc."

[ Reply to This | # ]

HOT NEWS - VERDICT IN!
Authored by: Anonymous on Tuesday, March 30 2010 @ 02:55 PM EDT
http://www.novell.com/prblogs/?p=2153

[ Reply to This | # ]

Jury Rules for Novell
Authored by: gfreeves on Tuesday, March 30 2010 @ 03:20 PM EDT
Hallelujah!! It's long past time. Get out that red dress, PJ!!

[ Reply to This | # ]

12 Jurors down, one Jurist to go...
Authored by: arch_dude on Tuesday, March 30 2010 @ 03:32 PM EDT
Great news on the jury verdict! Now when will Judge Stweart rule on the
"specific performance" alternative?

[ Reply to This | # ]

SCO Wants to Sell Java Patent and (Mostly) Pay the Professionals
Authored by: MrCharon on Tuesday, March 30 2010 @ 03:34 PM EDT
http://finance.yahoo.com/q/bc?s=SCOXQ.PK&t=1d

Open at 0.46
Current (as of posting) 0.09
Down 80.43%

Oh just went down another cent before I could even hit Submit...

---
MrCharon
~~~~

[ Reply to This | # ]

Thanks to PJ and Reporters Thread
Authored by: gfreeves on Tuesday, March 30 2010 @ 03:34 PM EDT
PJ, it's been a long time coming...too long...but THANK YOU for hanging in there
and keeping us informed. And to the reporters who came back with the details of
the court proceedings...THANK YOU TOO. We would have loved to have been there
ourselves, but your attention to detail was the second best thing.

I'm glad the court has spoken...and TSOG has had their day in court...and
finally justice has prevailed. Maybe the court can get some of the
"clawback" money from the miscreants.

[ Reply to This | # ]

XTRA XTRA! Salt Lake Tribune Scoops PJ! Novell Wins!
Authored by: Anonymous on Tuesday, March 30 2010 @ 03:37 PM EDT

The Jury is out! Novell owns the copyrights!

The SLT article is here.

Can't wait to see the orders. Pretty much kills the rest of the SCO case. IBM case is over. Judge Cahn can no longer say SCO has a good chance of prevailing. SCO will appeal, but what have they left to appeal? They got their day in court. They lost the bench trial and the jury trial. It's over, except for the whining.

--Celtic_hackr

[ Reply to This | # ]

The poison in the patent
Authored by: bugstomper on Tuesday, March 30 2010 @ 03:57 PM EDT
As I mentioned in an earlier comment, I think that Apache Tomcat contains
everything that is specifically claimed in the patent. You can confirm by
looking at the patent, which is linked in this article as exhibit C of #1099,
and the Apache Tomcat 3.3 User Guide (or any newer one, the relevant text is
almost identical), in the section Configuring Classes. I don't have a reference
that predates version 3.3 which is as clearly stated, but I believe that the
aspects of the design that cover the patent claims are fundamental and could be
found in 1997 and 1998 in Sun Web Server whose code was used to make the first
Tomcat, version 3.0 in 1999. The SCO patent has a filing date of December 15,
1999.

The poison pill for this patent, if I am correct, is that Tomcat, and its
offspring JBOSS and Glassfish, are what companies most use as the basis for
enterprise level Java application servers, and they are all free software. The
owner of this patent is not going to get a penny in settlement from the Apache
Software Foundation. If they tried to make money from users of Tomcat, etc. they
will get pushback from companies that have huge businesses built on the
technology, including IBM and Oracle. Since the underlying technology was
released in 1997-1999 as open source and directly became Tomcat, any proof that
Tomcat infringes is likely itself to be a demonstration of prior art, since the
allegedly infringing technology was probably put in there well before the patent
was filed.

[ Reply to This | # ]

Novell is very pleased with the jury's decision confirming Novell's ownership of the Unix.
Authored by: SilverWave on Tuesday, March 30 2010 @ 04:36 PM EDT
Truth will Out.

Well done to to every one who kept the faith.

SCO are a former Litigation company, that is they are now a deceased Litigation
company.

Goodbye SCO I will always loathe and detest you and what you represented. You
deserve to be treated with contempt and you have reaped the furious righteous
wrath you so deserve.

---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

[ Reply to This | # ]

SCO Wants to Sell Java Patent and (Mostly) Pay the Professionals
Authored by: Anonymous on Wednesday, March 31 2010 @ 12:33 AM EDT
Given Novell's win on the copyrights, perhaps the trustee should be looking at
conversion to Chapter 7 and a complete liquidation. Without the copyrights, the
"SCOsource" litigation plan is as good as dead. No hope of recovery
and becoming a going concern, only an eternal loss of whatever capital they can
lay their hands on. Stop the bleeding, this game is all over.

[ Reply to This | # ]

The "Java Patent" Itself
Authored by: Anonymous on Wednesday, March 31 2010 @ 09:48 AM EDT
Has anybody else read over that Java patent? I don't understand what's being
patented; the claims read like a summary of what the Java runtime system is
simply capable of straight out of the box. It has *always* just worked like
that, for the most part, and anything else is just stuff you'd do if you wanted
to implement something like a web server. It should be noted that the Java
servlet spec was completed by Sun back in 1997.

What am I missing?

[ Reply to This | # ]

Why including the other parts of that "business" with the patent is good
Authored by: Anonymous on Friday, April 02 2010 @ 11:07 AM EDT

Remember that SCOx is using all parts of its UNIX business, not just the patents and (Novell) copyrights to sue IBM.

So getting all the bits and pieces included ensures that the buyer cannot be sued by SCOx or its successor based on any other little piece of paper related to it.

[ Reply to This | # ]

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