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SCO Responds to SUSE Re Staying the Swiss Arbitration - Updated
Wednesday, October 31 2007 @ 08:39 PM EDT

SCO has responded [PDF] to the SUSE opposition [PDF] to SCO's motion [PDF] to "enforce" the automatic stay. This is the most significant document in today's bankruptcy collection. You can read about the SCO motion and the SUSE opposition if you want to refresh your memory as to what it's all about. In a simple sentence, SUSE wants to go forward with the arbitration in Switzerland; SCO wants it to be stayed. Oh, and they want SUSE punished blah blah. They always throw that sort of thing in, from the SCO v. IBM case onward. At least that's my impression. And it puzzles me a lot, because it never works out for them.

I'm still reading it, but it looks to me so far like SCO would like to do discovery in the bankruptcy court as to whether SUSE has more US ties than SUSE claims before a decision is made by the bankruptcy judge on the motion. That would inevitably stay the arbitration, I'd say. There is more than one way to skin a cat.

I gather SCO's view is that because a favorable judgement for SUSE in the arbitration would wipe SCO out financially, it should be stayed. SCO is so funny. It wants what it wants. That's it. It sees nothing beyond that, from all I can tell. It argues that SUSE began the arbitration, even if SCO started the underlying litigation, so it should be stayed. Lots of arguments about how many angels can fit on the head of a pin, so to speak. But the bottom line is SCO reeeeally doesn't want the arbitration to go forward.

SCO's attorneys have corrected [PDF] the mistake about how often SCO is responsible to pay Novell the undisputed royalties. They acknowledge it's supposed to be monthly. They don't correct their representations that SCO has always timely filed reports and paid what was due, though. They claim that SCO is collecting monthly and paying "shortly thereafter" whatever that means in SCOese. But SCO's wording in the document they are now supplementing said this:

Nowhere in the Motion does Novell state (because it cannot) that the Debtors (or their predecessors in interest) have ever failed to remit the required royalty payments in a timely fashion in the 12 years since the APA was executed. Instead, by making the timely, required post-petition payment of the royalties due for the third quarter of 2007, the Debtors have demonstrated (or will demonstrate) that they intend to perform in accordance with the terms of the APA.

Sounds like they intended to pay quarterly, and 45 days after the close of the quarter, and that this is what they've been doing. Is that timely? Now that we are all up to speed on what the APA actually requires, I'd argue not. Yet look at SCO's wording in the supplement:

Novell's principal "fear", expressed at paragraph 21 of the Motion, is that "SCO may not have the funds to pay Novell at the end of each quarter." (emphasis added). That anxiety must now be reduced by two thirds because SCO won't be holding Novell's money for a quarter. It will, and does even now, collect the royalties it receives for a month and remits promptly thereafter. More frequent payments, as Novell demands, would be nothing more than an annoyance on both ends of the transfer.

Actually, for Novell, I expect it'd be a relief. If you can make those two paragraphs align, you're a better man than I am. And any mockery of Novell's "fear" of not getting paid seems bizarre, when you consider the context and all that has happened in this sad saga so far. If SCO owed me money, I'd be plenty afraid I'd never see it. If I were Novell, I'd be even more afraid. There is some water under this bridge.

I doubt that Novell cares if they are paid monthly. They just didn't want to be paid 45 days after each quarter. Do you blame them? Who knows who will even own SCO's assets by then or if SCO will be in Chapter 7 instead of 11. SCO is in a screaming rush to try to sell off what it calls certain Unix assets, n'est-ce pas? I note SCO's attorneys call SCO's IP perhaps their most valuable asset. Well. Which IP assets would that be? The ones the Utah court said they don't own after all? This next hearing on November 6 should be an absolute hoot.

Anyway, I'll try to swing back by on the arbitration document after I read it carefully. It's getting harder and harder to keep up, with so many filings every day.

There is also an order accepting Michael Jacobs on to the Novell team in the bankruptcy. And there is an objection filed to SCO's motion for authorization to pay professionals in the ordinary course, which listed a German litigation, but I can't really make out the basis for the objection yet. It's pro se, so that's probably why. But it's certainly a valid question, I think, to ask why the US company, in bankruptcy, is paying the bills for a litigation brought by the German subsidiary, which is not in bankruptcy.

And I have another question. Is Mike Olson the same as the Michael Olson who just quit as Comptroller? A Mike Olson is listed as the CEO of the SCO German subsidiary. [Update: A Groklaw member Mathias Schindler saw my question, and he now tells me that he called SCO's German subsidiary and just asked. The woman who answered told him, he says, that it is one and the same person and that Mr. Olson remains the CEO of the German SCO subsidiary.]

Here, then, is today's collection:

171 - Filed & Entered: 10/31/2007
Order on Motion to Appear pro hac vice
Docket Text: Order Granting Motion for Admission pro hac vice Michael A. Jacobs. (Related Doc # [170]) Order Signed on 10/30/2007. (LCN, )

172 - Filed: 10/30/2007
Entered: 10/31/2007
Docket Text: Objection to Motion of Debtors Seeking Approval of the Retention & Employment of Certain Professionals Utilized by the Debtors in the Ordinary Course of Business (related document(s)[138] ) Filed by Alan P. Petrofsky (TAS, )

173 - Filed & Entered: 10/31/2007
Memorandum of Law
Docket Text: Memorandum of Law Debtors' Memorandum of Law in Reply to SUSE's Special Opposition to SCO Group, Inc.'s Motion to "Enforce the Automatic Stay" (related document(s)[69], [141] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit 1 - Filed Under Seal# (2) Exhibit 2 # (3) Exhibit 3 # (4) Exhibit 4 # (5) Exhibit 5 # (6) Exhibit 6 # (7) Exhibit 7 # (8) Exhibit 8# (9) Exhibit 9 - Filed Under Seal# (10) Affidavit of Service and Service List) (O'Neill, James)

174 - Filed & Entered: 10/31/2007
Response (B)
Docket Text: Response to Supplement to Debtors' Response in Opposition to Novell, Inc.'s Motion for Order Directing the Debtors to Remit Undisputed Future SVRX Royalties to Novell Upon Receipt (related document(s)[166], [90] ) Filed by The SCO Group, Inc. (Attachments: # (1) Certificate of Service and Service List) (O'Neill, James)

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