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Novell and SCO Agree on Interest, Trust Amounts; Final Judgment Still in Dispute - Updated
Friday, August 29 2008 @ 10:41 PM EDT

Novell filed today, as per the deadline, two documents, one an unopposed filing regarding interest due Novell by SCO -- SCO has agreed to the sum of $918,122 in prejudgment interest and $489 per day until the final judgment is entered.

That could be a while. The second filing informs the court that Novell still believes that a final judgment is premature, since the arbitration is not yet finished. It reminds the court that those claims were automatically stayed by the Bankruptcy Court, and that while SUSE disputed that, SCO successfully argued that the automatic stay should include the arbitration. When the Bankruptcy Court partially lifted the bankruptcy stay to allow Novell to drag SCO back to Utah on the two issues we saw at trial (the amount owed, and whether SCO had the right to enter into SCOsource licenses), the claims in arbitration remained under stay, so both the Utah court and the Bankruptcy Court stayed the arbitration claims, so Novell's position is that this prevents entry of final judgment at the moment.

Novell says it understands SCO may want to file a motion "advocating some particular disposition of those claims." Novell says if they do, as Novell expects SCO will, Novell will respond at that time.

Finally, we learn that all the negotiations between the parties resulted in an agreement "as to the proper amount of the constructive trust." The parties will present that agreement to the Bankruptcy Court, and Novell will inform the Utah court of developments.

What do I get from all this? SCO is frantic to get a final judgment, so it can file an appeal, and so it's trying to get all standing issues resolved.

Here are the filings:

08/29/2008 - 550 - RESPONSE re 542 Findings of Fact & Conclusions of Law, (Novell's Unopposed Submission Regarding Prejudgment Interest) filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 08/29/2008)

08/29/2008 - 551 - RESPONSE re 542 Findings of Fact & Conclusions of Law, (Novell's Submission Regarding Entry of Final Judgment) filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 08/29/2008)

Update: Here's Novell's Submission Regarding Entry of Final Judgment, as text:

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

MORRISON & FOERSTER LLP
Michael A. Jacobs (pro hac vice)
Eric M. Acker (pro hac vice)
Kenneth W. Brakebill (pro hac vice)
Mark J. Pernick (pro hac vice)
David E. Melaugh (pro hac vice)
[Address]
[Phone]
[Fax]

ANDERSON & KARRENBERG
Thomas R. Karrenberg, #3726
Heather M. Sneddon, #9520
[Address]
[Phone]
[Fax]

Attorneys for Defendant & Counterclaim-Plaintiff Novell, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff and Counterclaim-
Defendant,

v.

NOVELL, Inc., a Delaware corporation,

Defendant and Counterclaim-
Plaintiff.

NOVELL's SUBMISSION
REGARDING ENTRY OF FINAL
JUDGMENT

Case No. 2:04CV00139

Judge Dale A. Kimball

In its July 16, 2008 Order, the Court directed Novell "to file a brief within 15 days of this Order describing what, if any, prejudgment interest Novell seeks based on the amount awarded in this Order" and "to file within ten days from the date of this order a Final Judgment consistent with these Findings of Fact, Conclusions of Law, and Order, the court's August 10, 2007 Memorandum Decision and Order, and the parties' stipulations with respect to the disposition of certain causes of action." (Docket No. 542 at 42, 43.)

On July 30, Novell informed the Court that Novell believes entry of Final Judgment is inappropriate given the pendency of claims subject to an arbitration-related stay and given the Bankruptcy Court's reservation of issues pertaining to the entry of a constructive trust. (Docket No. 543.) Novell and SCO requested an extension of Novell's filing deadlines until August 22 to meet and confer regarding final judgment, which the Court granted. (Docket No. 544.) The parties subsequently requested and were granted a further extension to August 29. (Docket Nos. 548, 549.)

As reflected in Novell's unopposed request for prejudgment interest filed today, the parties have reached an agreement on an appropriate amount of prejudgment interest.

The parties have also reached an agreement as to the proper amount of the constructive trust. The parties anticipate taking this agreement to the Bankruptcy Court and expect resolution of trust-related issues in the near future. Novell will report to this Court any developments in that regard.

Notwithstanding the meeting and conferring, the parties have been unable to reach an agreement concerning the pendency of claims subject to an arbitration-related stay. These claims were stayed pending arbitration by this Court's order. (Docket No. 139.) The claims were subsequently automatically stayed by the Bankruptcy Court. SUSE disputed the effect of that stay on the arbitration, but SCO successfully argued to the Bankruptcy Court that the automatic

2

stay should apply to stop the arbitration. The Bankruptcy Court later partially lifted the bankruptcy stay, but only as to the following issues:
(1) the amount of the royalties to which Novell is entitled from certain SCOsource licenses that the District Court determined to be SVRX Licenses and any additional licenses that are determined to be SVRX Licenses; and (2) whether SCO had the authority to enter into licensing agreements with Microsoft Corporation and Sun Microsystems.
In re: The SCO Group, Inc. No. 07-11337 (KG), Docket No. 233 (Bankr. D. Del. Nov. 27, 2007). These claims therefore remain stayed by order of both this Court and the Bankruptcy Court. Those stays and the underlying pendency of the claims to which they apply prevent entry of final judgment.

Novell understands that SCO may elect to file a motion advocating some particular disposition of those claims. Novell will evaluate and respond to any such motion once filed.

DATED: August 29, 2008

ANDERSON & KARRENBERG

By: /s/ Heather M. Sneddon

Thomas R. Karrenberg
Heather M. Sneddon

-and-

MORRISON & FOERSTER LLP
Michael A. Jacobs, (pro hac vice)
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, (pro hac vice)
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice

Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.

3

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 29th day of August, 2008, I caused a true and correct copy of NOVELL'S SUBMISSION REGARDING ENTRY OF FINAL JUDGMENT to be served to the following:

Brent O. Hatch
Mark F. James
HATCH JAMES & DODGE, P.C.
[address]

Stuart H. Singer
William T. Dzurilla
Sashi Bach Boruchow
BOIES, SCHILLER & FLEXNER LLP
[address]

David Boies
Edward J. Normand
BOIES, SCHILLER & FLEXNER LLP
[address]

Devan V. Padmanabhan
John J. Brogan
DORSEY & WHITNEY
[address]

Via U.S. Mail, postage prepaid:

Stephen Neal Zack
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Heather M. Sneddon

4


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