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Oracle and Novell File Reservations of Rights RE SCO's Bankruptcy Sale Plan
Monday, August 16 2010 @ 08:04 PM EDT

Oracle, as well as Novell, have both filed a Reservation of Rights objecting to SCO's Motion in bankruptcy court to sell off all the assets, all but the litigation and whatever is on the list of excluded assets. If you recall, Oracle made an appearance in connection with an earlier SCO sales scheme, and now it says SCO needs to tell it more detailed information about the new plan and amend it, if any Oracle contracts are involved. "At this time, Oracle does not consent to any proposed assignment or transfer of use via the Sale Motion or otherwise, as proposed transfers must be in compliance with the license terms," Oracle tells the court. It has copyrights and patents on this software, it points out. Not that it needs to mention that this week. We are aware.

Here are the filings:

08/16/2010 - 1150 - Reservation of Rights by Oracle America, Inc. Regarding the Chapter 11 Trustee's Motion for Order (a) Authorizing the Marketing, Auction and Sale of Substantially all of the Debtor's Software Business Assets Consistent with Form Asset Purchase Agreement and Free and Clear of Liens, Claims and Encumbrances; (b) Authorizing Assumption, Assignment, and Sale of Certain Executory Contracts and Unexpired Leases; (c) Approving Bidding Procedures in Connection with Auction; (d) Establishing Sale Hearing Date and (e) Granting Related Relief Filed by Oracle USA, Inc.. (Attachments: # 1 Certificate of Service # 2 Service List) (Huggett, James) (Entered: 08/16/2010)

08/16/2010 - 1151 - Reservation of Rights of Novell, Inc. In Response to the Debtors' Motion for Authority to Sell Filed by Novell, Inc., SUSE Linux GmbH. (Greecher, Sean) (Entered: 08/16/2010)

Oracle says the Sales Motion should be denied with respect to any transfer of Oracle agreements, but going beyond, the Bankruptcy Code sets out "specific prerequisites that must be met before the trustee/debtor can assume and assign an executory contract, including (a) curing (or providing adequate assurance of a prompt cure of) an defaults under the subject contracts" and providing assurance of future performance. Without those two things, SCO can't just hand the executory contracts over to anybody, and Oracle reserves the right to be heard.

Novell/SUSE also reserve rights, but over everything. It believes some of the contracts it has with SCO would be subject to the SCO Motion and the proposed APA, but no one can tell, because there is a lack of specificity. Novell did notice some disturbing language:

3. In addition, pursuant to paragraph 2.2 of the APA, the Debtors plan to grant perpetual, non-exclusive, royalty-free licenses to use the Licensed Properties. Paragraph 1.34 of the APA defines Licensed Properties as "all copyrights and other Intellectual Property used by [the Debtors] in the Business that [the Debtors do] not own, including the copyrights owned by Novell, Inc." (emphasis added). Therefore, the APA in its current form has the effect of granting one or more Novell licenses to the Buyer."
Lacking any further specificity, Novell, like Oracle, reserves all rights. If in the future, it is learned that what is proposed is the assumption and assignment of Novell contracts, it would be subject to Novell's consent, "as well as the cure of any outstanding defaults". Heh heh. So Novell reserves the right to object.

If SCO's plan is, instead, to assign the contracts without Novell's consent, then Novell's position is that the APA is objectionable. It believes SCO "may be prohibited from transferring licenses from Novell that relate to the Novell Santa Cruz APA unless the Debtors assume that agreement. To do so, the Debtors would have to cure any outstanding defaults."

Novell wants to be paid. It seems, by my reading, that Novell suspects SCO wants to skip town, so to speak, on the midnight train, without paying them first. Or ever.

Finally, Novell points out that SCO can't sell what it doesn't own. Ownership is now an issue on appeal, and if SCO loses, it doesn't own certain of the assets, and "Novell hereby reserves the right to object to the Transaction on the basis that the Debtors do not have a property interest in certain of the Acquired Assets."

So both are reserving rights, but the underlying issue is that both would like more info. But I think it's interesting to see what Oracle said in its earlier notice:

Neither this Request for Special Notice nor any subsequent appearance, pleading, claim or suit is intended or shall be deemed to waive Oracle's and/or Oracle Credit Corporation's (i) right(s) to have final orders in non-core matters entered only after de novo review by a district judge; (ii) right(s) to trial by jury in any proceeding so triable herein or in any case, controversy or proceeding related hereto; (iii) right(s) to have the reference withdrawn by the United States District Court in any matter subject to mandatory or discretionary withdrawal; or (iv) other rights, claims, actions, defenses, setoffs or recoupments to which Oracle and Oracle Credit Corporation are, or may be, entitled under agreements, in law, or in equity, all of which rights, claims, actions, defenses, setoffs, and recoupments expressly are reserved.
They didn't waive a thing, including de novo review by a district judge, among other rights. Wouldn't it be nice if that happened -- that everything Judge Gross has let slide on by ended up with another judge in district court instead of Alice in Wonderland's bankruptcy court in Delaware?

If Oracle accomplishes something like that, I'd certainly be thrilled. My readers are losing faith in the US legal system.

Those of you who prefer a simple universe with white hats and black hats clearly identifiable will now be confused. But in this fact pattern, as I did in the MySQL issue, I say go, Oracle.


  


Oracle and Novell File Reservations of Rights RE SCO's Bankruptcy Sale Plan | 130 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here
Authored by: Erwan on Monday, August 16 2010 @ 08:17 PM EDT
If any...

---
Erwan

[ Reply to This | # ]

No, Go "Oracle America"
Authored by: Anonymous on Monday, August 16 2010 @ 08:19 PM EDT
Give me an "S", give me ...

Maybe not.

[ Reply to This | # ]

Countdown until motion is withdrawn
Authored by: bastiaan on Monday, August 16 2010 @ 09:12 PM EDT
SCO never ever wants to get specific. So this motion will soon be withdrawn,
which is much favourable to being forced to show its hand.

[ Reply to This | # ]

Off Topic Here
Authored by: SilverWave on Monday, August 16 2010 @ 09:12 PM EDT
Go Oracle?

hmmm

---
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 | # ]

News Picks Here
Authored by: SilverWave on Monday, August 16 2010 @ 09:13 PM EDT
Any one want to tell Oracle where to go?



---
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 | # ]

Prince of Darkness Thread Here
Authored by: SilverWave on Monday, August 16 2010 @ 09:15 PM EDT
You know who you are.

---
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 | # ]

Oracle and Novell File Reservations of Rights RE SCO's Bankruptcy Sale Plan
Authored by: Anonymous on Monday, August 16 2010 @ 09:35 PM EDT
Now it would be nice to hear from the US Trustee

[ Reply to This | # ]

Oracle and Novell File Reservations of Rights RE SCO's Bankruptcy Sale Plan
Authored by: Anonymous on Monday, August 16 2010 @ 11:06 PM EDT
"Losing" faith?

I propose a 51st state: Bliss. We can use BS as the postal abbreviation.

[ Reply to This | # ]

"My readers are losing faith in the US legal system."
Authored by: Anonymous on Monday, August 16 2010 @ 11:10 PM EDT
I think it is fair to say that a good proportion of your readers have ALREADY
lost faith in the US legal system (either from bitter experience before Groklaw
or through following the merit-less SCO court cases over the last decade).

I don't think getting one thing right though is going to remedy this. Especially
this late in the game. I know the US legal system is something PJ holds dear and
believes in strongly, but like other things in life - I need to look at the
evidence with an objective eye.

SCO's case has been drawn out, with no justice for the defendants of it's
nuisance lawsuit, for way too long to maintain a factual assertion that the
legal system has the balance right. It is obvious that anyone with the money and
the will to play games in the court room can do so for a long time. This tilts
the playing field in favour of those with deep pockets and a lack of ethics.

Remember the smaller companies that folded? Is it hard to blame them now? When
they could have been tied in expensive litigation with no hope of ever
recovering the legal fees used to defend themselves against merit-less claims?
The big guns, IBM & Novell, are looking like they'll never recover their
money - what chance does a small to medium size business have?

We have to face the facts that in the commercial litigation field, the facts are
not enough. You need *alot* of capital and the willingness to lose it in legal
fees to prove yourself right. That said, it is not unique to the US - simply
more prevalent there.

--EK

[ Reply to This | # ]

End up with another judge? I'll believe it when I see it
Authored by: Anonymous on Monday, August 16 2010 @ 11:36 PM EDT
Ain't no one gonna escape this tar baby bankruptcy court.

[ Reply to This | # ]

de novo review by a district judge
Authored by: digger53 on Tuesday, August 17 2010 @ 12:08 AM EDT
Sounds splendid to me. Go, Oracle! "Cry 'Havoc!' and let slip the dogs of war!"

[ Reply to This | # ]

Do we know what SCO owe to Oracle?
Authored by: tiger99 on Tuesday, August 17 2010 @ 08:10 AM EDT
Just curious, but I imagine it must be something significant, i.e. orders of magnitude bigger than what SCO owed for pizzas, to be worth the legal costs of a court filing.

Or is it just about continuity of the Solaris license? I thought Sun had bought that out, and no further payments were due.

[ Reply to This | # ]

Trying to get my mind around the current situation
Authored by: YurtGuppy on Tuesday, August 17 2010 @ 10:50 AM EDT
Having nearly reached the conclusion that SCOg does not own Unix and Unixware
copyrights, the powers in charge are attempting to sell remaining assets namely
the dregs of the Unixware development effort.

Are there still employees, source code in development, marketing channels in
existence?

Novell and Oracle arise to object to an asset sale because Novell wants to be
assured they will get their money out of any proceeds (?) and Oracle wants to be
assured that contractual agreements and licenses with SCOg are not advertised as
being transferable when such may not be the case (?)

I admit to being a little lost on this asset sale. Is there actually a proposal
under scrutiny?

I am particularly lost on why Oracle should care. Do you think they are being
prompted to participate by some other player?

---

just swimming round and round

[ Reply to This | # ]

Are Lawyers Trained to Lie?
Authored by: Anonymous on Tuesday, August 17 2010 @ 10:57 AM EDT
Novell/SUSE also reserve rights, but over everything. It believes some of the contracts it has with SCO would be subject to the SCO Motion and the proposed APA, but no one can tell, because there is a lack of specificity. Novell did notice some disturbing language:

One has to wonder whether or not this entire saga between Novell & SCO et al.., is all about which lawyer can lie better. SCO lawyers keep claiming it "bought everything" way back when ... Was it simply a case - way back when - that Novell lawyers were better liars?

Are SCO's lawyers trying to get the upper hand back - over the past year or so - by lying better now than other lawyers - see "disturbing language" in the above quote?

If the above is true - than it definitely makes a mockery of the entire legal system in the USA.

[ Reply to This | # ]

More strange wording in the sale motion
Authored by: Anonymous on Tuesday, August 17 2010 @ 11:47 AM EDT
In the motion to authorize the sale of substantially all of the debtors assets related to the UNIX business, the wording of section 6.3 seems very strange to me:
6.3 List of Designated Executory Contracts. Not fewer than seven (7) Business Days prior to the Sale Hearing, Buyer shall deliver to Seller a final list of the Designated Executory Contracts to be acquired by Buyer in connection with the Closing, pending approval of such list by the Bankruptcy Court.
Emphasis added by me. Does this seem strange, or is it a typo? This says that the buyer, whoever they may end up being, will give the seller (SCO) the list of contracts that will be included in the sale. Wow, so no one will know what contracts will be transferred until after the auction is over, and it will be at the buyer's discression, not the seller?????

Combine this with the schedule proposed in the same motion document, and it makes no sense whatsoever. The auction is proposed for November 1, and the sale hearing for November 3. So 7 days prior to the sale hearing, the auction would not yet have been held, so no one would know who the buyer is yet, but the buyer is supposed to tell the seller what contracts will be included in the sale. Even if it is a typo, and the seller is supposed to give the buyer the list of contracts, the buyer will not yet be known, so who are they gonna tell? I would also think that whatever is going to be included in the sale would need to be disclosed to everyone concerned, including any potential bidders, as well as all of the creditors, well before the auction, not less than a week prior to the auction as proposed by this document.

Curioser and curioser said Alice.

[ Reply to This | # ]

Oracle and Novell File Reservations
Authored by: rsmith on Tuesday, August 17 2010 @ 01:05 PM EDT
Don't we all have our revervations about SCOG's sale plans? :-)
It's not their previous plans have been brilliant ones! Especially considering
the amounts of money that both the original management and the trustees advisers
have been getting. (I was going to say "earning", but they haven't,
IMO.)

I wouldn't trust them with organizing a garage sale!

---
Intellectual Property is an oxymoron.

[ Reply to This | # ]

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