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Morrison & Foerster Finds Out Who Wants to Buy the Cattleback Patent - A Client! - Updated, as text
Monday, December 03 2007 @ 06:08 PM EST

It simply doesn't get any funnier than this. While SCO has been trying hard to keep the name of the proposed buyer of the Cattleback Holdings patent a secret, even from the court, it turns out that the buyer was a client of Morrison & Foerster, although the Morrison & Foerster lawyers representing Novell weren't aware of it. Novell is opposing the sale.

Here's how something like this can happen.

It's a right hand, left hand thing, and it's because of SCO hiding behind a subsidiary. Morrison & Foerster is a huge law firm, with offices all over the place. The guys in the Hong Kong office don't know what the guys in San Diego are working on unless they all input their info into a database and cross check. Had SCO not played games with secrecy, this likely would not have happened, because no law firm can represent both sides of an issue, unless the clients say it's fine, and even then, it's not such a great idea, and before you accept a client you have to check to make sure there are no conflicts of interest. They have software just to keep track of it, because in a firm with hundreds of lawyers scattered all over the world, you won't otherwise know who everyone is representing.

But because it was a SCO sooper sekrit, it likely wasn't possible to immediately do the usual types of checking. Don't forget that SCO set up the Cattleback Holdings subsidiary precisely so no one would know it was really SCO. Darl McBride said pretty much that at the 341 creditors hearing. They didn't want buyers to know it was SCO. Somehow the lawyers representing the buyer realized what was happening anyway at some point, and lawyers for SCO realized it and told Novell's lawyers, and now the game is over. Novell's lawyers, if not Novell, know now the name of the buyer. This is an amazing development, with all kinds of potential issues arising from it. But it also meant Morrison & Foerster had to take immediate steps to build a wall barring all communications between lawyers for the buyer and lawyers for Novell, and the representation of the buyer has had to cease at least unless/until it is approved by the bankruptcy court. But now it knows who the secret buyer is.

I know. SCO is the gang that couldn't shoot straight. This hearing on Wednesday should be one for the books. Actually, with this surprising development, I'm wondering if we should keep alert for notice that the hearing has been postponed. It hasn't been yet, but it certainly is conceivable that it could be. There's a knot in the shoelace that has to be untangled. On the other hand, if the deal hasn't a prayer of being approved, it may not matter at all.

Here are all the filings:

240 - Filed & Entered: 12/03/2007
Order on Motion to Authorize
Docket Text: Order Approving Debtors' Motion for Entry of Order Authorizing the Expansion of the Scope of Mesirow Financial Consulting, LLC's Retention and Employment to Include Sale and Valuation Services Nunc Pro Tunc as of October 8, 2007. (Related Doc # [189]) Order Signed on 12/3/2007. (LCN, )

241 - Filed & Entered: 12/03/2007
Affidavit
Docket Text: Affidavit of Ordinary Course Professional Madson & Austin Filed by The SCO Group, Inc.. (Attachments: # (1) Affidavit of Service and Service List) (Werkheiser, Rachel)

242 - Filed & Entered: 12/03/2007
Notice of Withdrawal (B) Docket Text: Notice of Withdrawal of Response of The 363 Group, Inc. to Debtors' Motion for Approval of Compromise of Incipient Controversy (related document(s)[235] ) Filed by The 363 Group, Inc.. (O'Neill, James)

243 - Filed & Entered: 12/03/2007
Exhibit
Docket Text: Exhibit // Notice Regarding Limited Objection to Motion for Approval of Compromise of Incipient Controversy Regarding Cattleback Intellectual Property Holdings, Inc. (related document(s)[234], [194] ) Filed by Novell, Inc.. (Greecher, Sean)

244 - Filed & Entered: 12/03/2007
Certificate of Service
Docket Text: Certificate of Service for 1st Interim Application of Dorsey & Whitney Filed by The SCO Group, Inc.. (Schnabel, Eric)

245 - Filed & Entered: 12/03/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order Approving Debtors' Motion for Entry of Order Authorizing the Expansion of the Scope of Mesirow Financial Consulting, LLC's Retention and Employment to Include Sale and Valuation Services Nunc Pro Tunc as of October 8, 2007 (related document(s)[240] ) Filed by The SCO Group, Inc.. (O'Neill, James)

You see that 363 Group's withdrawal is total, if terse, probably the shortest filing yet. Two sentences, but they tell a tale:

The 363 Group, Inc. ("363") previously a Response on November 28, 2007 to the Motion for Approval of Compromise of Incipient Controversy, filed by that above-captioned Debtors and Debtors in Possession (collectively, the "Debtors"). 363 withdraws its Response.

There was a P.S., but they thought better of it. It read: "P.S. We hate Groklaw." Nah, just joking.

And here's Morrison & Foerster's Notice as text:

*************************************

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re

THE SCO GROUP, INC., et al.,

Debtors.
Chapter 11

Case Number 07-11337 (KG)
(Jointly Administered)

Hearing Date: December 5, 2007 at 10:00 a.m. (prevailing Eastern time)

NOTICE REGARDING LIMITED OBJECTION TO MOTION FOR APPROVAL OF
COMPROMISE OF INCIPIENT CONTROVERSY REGARDING CATTLEBACK
INTELLECTUAL PROPERTY HOLDINGS, INC. [DOCKET No. 234]

Counsel for Novell, Inc. hereby notifies the Court of the following:

On Friday, November 30, 2007, the undersigned counsel of Morrison & Foerster L.L.P. learned for the first time that other attorneys at Morrison & Foerster (who are not involved in the representation of Novell in this bankruptcy or the litigation between Novell and the Debtor) represent the proposed buyer of U. S. Patent No. 6,529,784 from Cattleback Intellectual Property Holdings, Inc. That proposed transaction is the subject of Novell's Limited Objection identified above. This information came both from counsel for Debtor and through internal communications.

The undersigned counsel of Morrison & Foerster promptly took the following steps:

1. Working with internal conflicts counsel at Morrison & Foerster, the attorneys representing the proposed buyer were instructed to cease all such representation related to the proposed transaction unless and until it is approved by this Court;

2. An internal "wall" was erected at Morrison & Foerster barring communication between attorneys representing the proposed buyer and attorneys representing Novell in this bankruptcy; and

3. The undersigned counsel of Morrison & Foerster notified its client, Novell, Inc., of the potential conflict of interest.

DATED: December 3, 2007
New York, New York

MORRISON & FOERSTER LLP

/s/ Adam A. Lewis
Adam A. Lewis (admitted pro hac vice)
[address, phone]

-- and -- Dated: December 3, 2007
San Francisco, California

MORRISON & FOERSTER LLP
/s/ Michael A. Jacobs
[address, phone]

Counsel for Novell, Inc.


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