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Finally We Get to Read the Mobility Assets Sale Agreement with Darl McBride
Thursday, September 02 2010 @ 12:46 PM EDT

Darl's purchase of the mobility assets was all done pretty much in the dark. We, the public were told one thing in advance, but something else after the fact. But now we get to see the final agreement.

Darl and Me Inc Holdings LLC, Darl's LLC, got not only the copyrights but a patent application as well, including rights to sue for any past infringement. The patent is entitled "Systems and Methods for Providing Distributed Applications and Services for Intelligent Mobile Devices," and the application was filed in 2006, #11/533347. We were told in advance of the sale that this patent application was excluded, but then he got it anyway.

What was SCO thinking, I was asking myself as I read the agreement? I could just see it: "Darl sues Google's Android". Why not? Everyone else and his dog is. Of course there's some prior art on that method of making fast, easy money. Seriously, though, if you check the transaction history for this patent application with the USPTO's PAIR system, what you learn is fascinatingly funny.

At the time of the sale in April, the patent application was still working its way through the system. There was a non-final rejection notice that issued in January of 2010, which presumably Darl knew about if he did any due diligence. In July, post-sale, there was a request for more time to answer that notice and then they filed a reply. But on August 17, there was a final notice of rejection anyway of claims 1-17 and 19-20. Prior art and obviousness. Claim 18 had been "withdrawn from consideration" so the rejection was not only final but total. Darl has 3 months to reply, and, in some conceivable convoluted drag-it-out process the rejection outlines, it could last six months, tops. But it looks like Darl bought a pig in a poke.

And some of you say there is no God.

Here it is, the agreement:

09/01/2010 - 1166 - Certification of Counsel regarding Mobility Sale Motion (Executed Asset Purchase Agreement) (related document(s) 1066 , 1104 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Attachments: # 1 Exhibit) (Fatell, Bonnie) (Entered: 09/01/2010)

Nevertheless, it was a gamble on SCO's part, a calculated one, no doubt, but still, any way you look at it, SCO's Cahn for a mere $100,000 sold off, as you can see in Section 2.1(a) of the agreement, all the related IP, copyrights and trade secrets, the works, and the source code and the possible patent and everything else (domain names, servers, test phones, assumed contracts, etc.) to what some call a serial litigator. The announced deal in advance was not a sale of the IP but a license for it, most of it, and the price then was $35,000. That's what was approved initially. So Darl got the patent application and all the rest of the IP for an additional $65,000, more or less. Weren't the professional fees for doing this deal more than that? SCO also got a license back on the source code, and it licensed the source of patchck to Me Inc Holdings. SCO did own a real patent, but it got sold to Liberty Lane, if you recall, after the Darl deal. You'll see it in the Excluded Assets list in the Darl agreement, so this is so you don't get confused.

So, SCO arranged to get protection for itself and the trustee, while throwing the rest of us to the wolves, although in fairness, Cahn likely got an assessment of the patent's likelihood of issuing prior to making the deal, making it a rather canny transaction on his part, one unlikely to harm anyone but Darl. That likely bothered Cahn very little, I'm guessing. Maybe it was his favorite part. Revenge is a dish best eaten cold, I've heard.

Here's what makes me think that. Cahn made another savvy move. If you notice, there is one section in the agreement that applies not to the buyer Me Inc Holdings but exclusively to Darl McBride. He individually in Section 6.2 had to promise not to to sue the seller, SCO Group, *or the Trustee*, for any conceivable reason that he might invent "from the beginning of the world and thereafter". The letter Darl sent him was not endearing. And Mr. Cahn didn't just fall off a turnip truck. Here's the letter from Darl to Cahn, where he accused him of conflict of interest and breach of fiduciary duty, implying that he was billing too much and looking after himself and not SCO's interest in the litigation. Not endearing at all.

Darl and Me Inc Holdings can still sue SCO regarding the particular sale here, of course, but if Darl wants to do that, the agreement says he has to go to Bankruptcy Court in Delaware, which he agrees has exclusive jurisdiction. Given how the judge there does whatever Cahn asks him to, I'd say that clause was in the nature of a further layer of protection. There's even a clause agreeing that neither party will request a jury trial and neither will talk to the media about this sale. I deduce Mr. Cahn has been watching Mr. McBride at work.

Darl's Me Inc Holdings business is in business, by the way, or at least it has a website, in case you are drooling to be a Darl customer. And why wouldn't you be?

Well, personally I'd want a no-sue clause first. With a no-slander, no-stalking clause thrown in for good measure. But that's just me.

[ Update: Groklaw member DavidJakeman suggests that I should not forget Groucho's sanity clause as well.]

Because Darl threatened Cahn at least impliedly if he didn't pursue the litigation against IBM and the rest as Darl wanted him to, the no-sue clause matters. Cahn did pursue it, but now, he can make decisions about all that without the same level of threat.

I notice that the IP agreement was signed by Darl on April 20 and SCO signed on April 21, 2010. The auction, we were told, was on April 5. So, this would tend to support the claim SCO made that the deal changed when a second bidder showed up at the auction, and that this is why the deal changed.

Exhibit E shows the breakdown by class of the amounts paid, $10,000 for Class V, $85,000 for Class VI, and $5,000 for Class VII. I assume, after reading this explanation of IRS Classes, that Class V is "tangible personal property and real estate", so the equipment goes here. Class VI is "Section 197 intangible assets except for goodwill" which includes, according to this IRS explanation, the promise not to sue and the licenses and trade name, certain computer software, and "Certain separately acquired interests in patents or copyrights". Class VII is "goodwill and going concern value". $5,000 for that last is all the parties thought it was worth.

So, Mr. Cahn has removed Darl as a threat to himself and to SCO. Of course, Cahn still has to get his head out of the mouth of the other tiger, Mr. "We don't care how big you are. If you mess with us, we're going to take you on, even to our utter destruction" Ralph Yarro. From what I see here in this agreement, I'd say Cahn has the skills to do it, if he wants to.


Finally We Get to Read the Mobility Assets Sale Agreement with Darl McBride | 254 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here.
Authored by: Erwan on Thursday, September 02 2010 @ 12:49 PM EDT
If any.


[ Reply to This | # ]

News Picks discussions
Authored by: Erwan on Thursday, September 02 2010 @ 12:49 PM EDT
Please, quote the article's title.


[ Reply to This | # ]

OT, the Off Topic thread
Authored by: Erwan on Thursday, September 02 2010 @ 12:50 PM EDT
As usual.


[ Reply to This | # ]

Comes here.
Authored by: Erwan on Thursday, September 02 2010 @ 12:51 PM EDT
Comes transcripts here. Thank you for your hard work.


[ Reply to This | # ]

Taking care of Yarro
Authored by: Anonymous on Thursday, September 02 2010 @ 01:26 PM EDT
Conveniently, there's another "auction" in the works, with an
already-assumed winner. Think that Cahn is planning to use that to tie Yarro's
hands the same way he tied Darl's?

On the other hand, if Cahn thinks that an explicit contract not to sue is going
to stop Darl from suing, then I think that Cahn hasn't really understood Darl.


[ Reply to This | # ]

Darl's Finances?
Authored by: Anonymous on Thursday, September 02 2010 @ 02:00 PM EDT

Are Darl's finances up to launching a company in this market? While I think that Darl was paid far more than he deserved while running SCO, I don't think he really accumulated enough assets to launch a serious business on his own, particularly when you consider that he would have to hire other people to do the actual work for him. If any other investors were interested in the "Me" assets, they could have bid on them without Darl (who would be somewhat of a liability).

Certain sources are claiming that his house is listed by a large mortgage auction site as being auctioned off by his bank. I'm not going to provide any links for that however as that would be pointing to Darl's (alleged) home address. If Darl is finding money to be a bit tight right now, "Me" will probably simply vanish before long. There are lots of people paddling around in the mobile software business right now. I doubt that there is any market segment remaining that isn't already covered several times over by other companies.

[ Reply to This | # ]

Finally We Get to Read the Mobility Assets Sale Agreement with Darl McBride
Authored by: Anonymous on Thursday, September 02 2010 @ 02:12 PM EDT
So, I wonder if this was part of the last minute deal that upped the price to

[ Reply to This | # ]

Authored by: nola on Thursday, September 02 2010 @ 02:28 PM EDT
Shakes head ... "why aren't there people in jail?"

[ Reply to This | # ]

Authored by: Anonymous on Thursday, September 02 2010 @ 02:53 PM EDT
Typically the phrase is that revenge is a dish best served cold.

If it is "eaten" cold, then it means that you are on the receiving end
of it - and you don't typically find it "best".

But it is just semantics.

[ Reply to This | # ]

Amused by this phrase in the patent application
Authored by: Anonymous on Thursday, September 02 2010 @ 03:23 PM EDT
"Intelligent mobile devices". As far as I'm aware AI still has a fair way to go before any such thing is likely to be available.

There is a good chance the patent will expire before the devices it applies to exist ;)

[ Reply to This | # ]

  • Hey!!!! - Authored by: Ian Al on Friday, September 03 2010 @ 05:16 AM EDT
Well that's really very enlightening.
Authored by: SilverWave on Thursday, September 02 2010 @ 03:35 PM EDT
hhmm Darl's playing with the big boys now :-)

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 | # ]

Authored by: inode_buddha on Thursday, September 02 2010 @ 04:00 PM EDT

*checks underpants*

Aahhh ahahaha..... hehe


"When we speak of free software,
we are referring to freedom, not price"
-- Richard M. Stallman

[ Reply to This | # ]

  • Bwahahahahaaa - Authored by: Anonymous on Thursday, September 02 2010 @ 09:31 PM EDT
A no sue clause?
Authored by: The Mad Hatter r on Thursday, September 02 2010 @ 05:22 PM EDT

Fascinating. Totally fascinating.


[ Reply to This | # ]

A "no sue clause" would stop Darl?
Authored by: Anonymous on Thursday, September 02 2010 @ 06:00 PM EDT

The guy who was the leader of a group that appeared to - with no qualms - twist various wordings to their own benefit even to the point of completely ignoring words that worked against them? The same group who would argue one thing one moment because it suited their argument then argue the exact opposite the next because it was damaging?

Sure.... that'll stop Darl.... really... seriously... don't you believe me?

The guy who wrote a letter to Congress about Linux being anti-capitalism would not shy away from a simple (in comparison) challenge of claiming the no-sue clause is unconscionable and therefore unenforceable.

As for the bit about taking it to the bankruptcy court, I'm thinking:

    Uh... yea... isn't that how bankruptcy normally works? That any lawsuits against the bankrupt-protected company start at the bankruptcy court?
Sorry P.J. While I would agree with you under normal circumstances that such clauses would have meaning. In this instance...

Well... put simply, from Darl's perspective, I can't imagine they had any more meaning or value then the "Excluded Assets: All copyrights and Trademarks except..." clause in the Novel-Santa Cruz APA.


[ Reply to This | # ]

PJ "some of you say ..."
Authored by: Anonymous on Thursday, September 02 2010 @ 06:07 PM EDT
Yes, there is no God.

Scientifically speaking, God is just an over-extension of Theory of Mind which
enables humans to understand the motivations and intentions of other humans.
It's hardwired into most of us neurologically.

We then over-apply that ability to find motivation and intentions (i.e. agency)
in nature which really results in out creation of God as an explanation for
things we can't otherwise understand.

I know it's threatening for God believing folk to hear things like this but I am
not questioning your basic social ability.

For whatever reason Darl has a pig in a poke, as PJ says, God is not involved.

We really shouldn't look to God to explain SCO and Linux -- sorry.

Shawn B. from Minnesota

[ Reply to This | # ]

Finally We Get to Read the Mobility Assets Sale Agreement with Darl McBride
Authored by: Anonymous on Thursday, September 02 2010 @ 08:02 PM EDT

"Of course there's some prior art on that method of making fast, easy money."

Yep. Just ask Dave Rhodes.

[ Reply to This | # ]

Better to have burned the Mobility Assets
Authored by: Anonymous on Thursday, September 02 2010 @ 08:38 PM EDT
Given the outcome and the costs involved SCO would have been further ahead if
they had gathered all the Mobility Assets in a drum and set them on fire. I
hope the current auction will bring in enough to cover the expenses.

[ Reply to This | # ]

If Cahn's idea of "fiduciary duty"
Authored by: Guil Rarey on Thursday, September 02 2010 @ 09:09 PM EDT
Is to discreetly wind down the company as gently as possible while hanging giant
corporate-veil-piercing "oh, please sue me now" bullseyes on McBride
and Yarro...

Well then I just might have to revisit my opinion of Judge Cahn.

It's worth note that through all of this with either asset sale, neither IBM,
Novell, nor the US Trustee has squawked to any significant degree.

Clearly Judge Goss is someone who is willing to operate with a certain looseness
about procedural rules. I'm now wondering if there wasn't some sort of ex parte
conference (perhaps without Goss's presence) off the record somewhere where
certain understandings were achieved.

If the only way you can value something is with money, you have no idea what
it's worth. If you try to make money by making money, you won't. You might con

[ Reply to This | # ]

Your gloat is showing.
Authored by: Anonymous on Friday, September 03 2010 @ 01:36 AM EDT
Darl knew what he was getting. Eyes wide open, y'all.

This is just one small step - ask yourself why he'd knowingly go into this,
knowing he's paying for nothing. Lending a hand? Puppet on the strings?
Living up to his end of Faust's bargain? You got it.

Wish it weren't so, but it is.

[ Reply to This | # ]

Talk about obvious!
Authored by: Anonymous on Friday, September 03 2010 @ 04:27 AM EDT
If you took two or three moderately capable software engineers, put them in a
room with a whiteboard, and asked them to design an application delivery system,
just at bullet-point level, they would come up with something very close to this
patent, tho' written in English rather than this childish-looking legalese.

How do I know this?

Simple. Because I was present during precisely such a session when a system was
designed for automatic remote update of intelligent terminals, back when there
was a vogue for non-PC desktop systems, in about 1998.

Oh yes, I worked for SCO (the real one) at the time.

It of course was never considered for a patent, being obvious.

[ Reply to This | # ]

Patents, Final Rejection
Authored by: Anonymous on Friday, September 03 2010 @ 07:28 AM EDT
A "Final Rejection" does not mean anything, at least not much. You'll
have to make a "Request of Continued Examination" (RCE) and pay a fee,
then you can proceed arguing or with amended claims (or both). Essentially, you
can have as many RCEs as you can afford if the Examiner is not buying into it
and issues a further "final" rejection.


[ Reply to This | # ]

vague patent
Authored by: Anonymous on Friday, September 03 2010 @ 08:57 AM EDT
and obvious

all laptops were created as mobile computer devices just
that they were a bit too big, so smaller things started
being used and phones....a natural progresson.

and when was the first mobile device made?
laptop is a device that can be moved while used and this

so darls gonna be a P-TROLL
good luck darl better luck nextlife

[ Reply to This | # ]

Please Delete
Authored by: Ed L. on Saturday, September 04 2010 @ 11:43 PM EDT
inappropriate "humor"...

Real Programmers mangle their own memory.

[ Reply to This | # ]

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