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SCO Uses the "Core" Word - Asks for Stay to be Enforced in Arbitration
Saturday, September 29 2007 @ 09:23 AM EDT

They are certainly never boring. Now SCO has filed a Debtor's Motion to Enforce Automatic Stay [PDF]. On page 3 of the Motion, in the jurisdiction section, we find SCO using the "core" word for the first time in a filing:
(i) Subject Matter Jurisdiction

11. This Court has jurisdiction of this Motion pursuant to 28 U.S.C. 1334. Moreover, this is a core matter as one of the most important and "core" concerns in a bankruptcy case is the extent and the enforcement of the automatic stay. 28 U.S.C. 157(b)(2)(A).

As you see there is a hearing set on this for November 6. It should be a fascinating display. Because what SCO is now asking the court to do, aside from enforcing the stay to cover the arbitration, is to block any attempt by SUSE to transfer its claim "to a foreign entity that has no minimum contacts with the United States ... against whom asserting personal jurisdiction may prove difficult." It says that a transfer of the claim could serve "as a means to flout the Court's jurisdiction as part of a strategem to jump to the head of the line of creditors." Go, SUSE. That's all I can say. Kidding. This could just be SCO's imagination or an attempt to write a stronger motion about something that hasn't happened and for which there is no evidence submitted that it ever will happen. Time will tell. I guess things must not be going so well in the arbitration either. That was supposed to start early in December.

Either that, or SCO is doing great and their future is as rosy as can be, and we'll all be shocked and awed in a couple of weeks when SCO announces something or other.

Here's the quote from the Salt Lake Tribune:

"I can tell you that other parties are very interested in our business," McBride said in an interview this week. "We are in discussions. Again, I think our enemies who have pronounced our business' death may want to halt the presses a bit until they hear some of our announcements that will be coming out in the next couple of weeks with respect of how we will reorganize and how we will go forward with our business model."

Who said their business was dead? It's the lawsuit that is passing on to the great Litigation Cemetery in the Sky. Unless that's the business model. Actually Laura DiDio says she thinks their business, well.. I will let her tell you in her own words:

McBride said he is confident that ruling will be overturned when the company is able to appeal the case to the 10th Circuit Court of Appeals. He believes the company's case remains strong based on facts and witnesses who could testify.

Beyond the litigation, McBride said the company will continue to market its Unix products and pointed to its recent launch of a mobile software server system for which it sees a big market.

But Laura DiDio, an analyst with the research and consulting firm Yankee Group, wonders whether whatever marketing effort the company undertakes will be harmed by the bad will it has garnered as a result of the lawsuits.

"What happened to them when they undertook this is they became an industry pariah," she said. "In hindsight, I think the biggest mistake that SCO made was try to sue corporate customers. That really set the industry against them."

Actually, what happened, as I watched it, is they made claims that the court said didn't hold water. It's very hard to win a copyright infringement claim if you don't own the copyrights. And even if they owned them, it's still hard if you can't point to any infringed code. I don't view Ms. DiDio as an "enemy" of SCO's though. Au contraire. She is here supporting the "enemies" theory, after all. Whereas it's more a moral indignation people feel when they see litigation that has no legal basis, as far as they can see. But SCO's problem is inside a courtroom in Utah, and that has nothing to do with enemies or bloggers or the industry. It's about evidence there, and SCO fell short.

Personally, I can't wait to find out who is really behind this try-to-kill-off-Linux-via-litigation strategy. Come out, come out, wherever you are. I can't think of any other reason to be interested in SCO's business, since that seems to be the business SCO has been in. Maybe he means the mobile business. I'm sure we all wish them success there. The problem I see is that their reorganization plan has to be approved by the court, and that isn't a shoe-in, and so any funding SCO gets now would conceivably be placed in the pot for the creditors, like Novell and IBM, for example. You know, those Linux people.

Here's the entire docket entry:

69 - Filed & Entered: 09/28/2007
Motion to Authorize (B)
Docket Text: Motion to Authorize Debtor The SCO Group, Inc.'s Motion To Enforce The Automatic Stay Filed by The SCO Group, Inc.. Hearing scheduled for 11/6/2007 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 10/18/2007. (Attachments: # (1) Notice # (2) Exhibit A to G # (3) Proposed Form of Order # (4) Certificate of Service) (O'Neill, James)

Oh, and of course SCO says in its motion it wants Novell sanctioned and to have to pay damages. If only someone would give SCO a nickel for each instance of indignation in its court filings, they'd be rolling in dough. If you look at Exhibit A in the Exhibits A-G attachment, though, you'll see that Novell doesn't agree that the bankruptcy stays the arbitration, and it will oppose this motion. I don't think you can get sanctioned for not agreeing with SCO. Not unless there's a new Yarro's law or something. Good thing I already explained what a core proceeding is. Otherwise I'd have to work on a Saturday.

I have a new theory. SCO must be secretly a fan of Groklaw, or it wants to go down in the legal history books and be used in law schools down through the ages, so it is trying every possible gambit in every conceivable legal specialty so as to provide us an opportunity to broaden our knowledge. It's a public service. Also a really nice way to make sure I get more wonderful awards.

You think? Joke. Joke. Either that or Boies Schiller is just having fun. It's not every day you get a client that will agree to try absolutely everything, no matter how farfetched. It sure is fun to watch. This is bankruptcy for the rich, and it's an absolute riot. Don't think for one minute that bankruptcy goes like this for you, if you ever filed. I simply love SCO's arguments on why the arbitration is a "core proceeding". I was literally grinning as I read it. Let's just say, it's, in my view, a stretch. Was SUSE asking for money from the arbitration? Because if not, I just can't see how it's in any way related to the bankruptcy court. I thought all SUSE wanted was a ruling of rights, a decision on whether SCO even has a right to bring a copyright action against SUSE. Not that SCO turned out to have gotten the UNIX or UnixWare copyrights from Novell, but that's another story.

That doesn't mean this gambit won't work, of course. I'm not a lawyer or even a bankruptcy para. And you never know what might work if your lawyer sails through the air on a flying trapeze, and that is what SCO is doing, I think. Trying. Desperately. To. Survive. But it is ironic that the company that told us over and over since 2003 that it couldn't wait for its day in court now is running as fast as it can to get away from the judgment that resulted from its day in court.

In a letter dated September 21, Novell writes to the arbitration panel:

Reference is made to the Procedural order No. 2 dated May 20, 2007 (PO2). Pursuant to Item 2 of PO2, the Parties shall by September 21, 2007, confer and endeavor to agree on logistical and other procedural arrangements for the hearing in December and report to the Arbitral Tribunal accordingly.

The Parties' counsel have conferred about this subject, but have not been able to make progress due to different positions about the impact of SCO's recent bankruptcy filing. SCO has informed SUSE that it believes that the arbitration should be stayed in view of the bankruptcy filing, and that SCO may make an application in this respect. SUSE, in contrast, is of the view that the bankruptcy filing does not stay the arbitration, and that the proceedings should continue.

In the meantime, SUSE will be submitting its Opposition to SCO's Counterclaim next Monday, as required by Procedural Order No. 3. If SCO applies to stay the arbitration, SUSE will respond at that time.

It's time. Who knew that SCO had filed a counterclaim in the arbitration? Don't you love bankruptcy court? All the secrets come tumbling out. Oh, sadly, I note that the arbitration panel asks for a document to be submitted in Word format. Sigh. That's on page 5, Exhibit B. But look at the next page of Exhibit B, where the arbitration panel writes that SCO has provided the following information:

Further, SCO states that even if this arbitration is to proceed, an extension of the current schedule (and an adjournment of the forthcoming hearing) will be required in any event, since SCO is currently without counsel authorised to represent it in connection with this arbitration.

No, I don't know what that means. I am wondering if it just means the bankruptcy court has to authorize payments or if it means the lawyers quit or isn't interested in doing work for nothing in the arbitration. I'm sure in time we'll find out.

Naturally, the Arbitral Tribunal asks the parties for info on just how US bankruptcy law applies. But the letter ends saying that as of now, the hearing date of December 3 to 14 "remains fixed."

Exhibit D is the UnitedLinux LLC agreement, dated May 29, 2002. The dispute resolution section begins on page 46. Exhibit F is the SuSE/Novell IP license agreement, on page 76, some small bits redacted. See what I mean about bankruptcy court?


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