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Two More Bills in the SCO Bankruptcy & Some Trademark Oddities
Friday, July 03 2009 @ 02:34 PM EDT

There is another bill [PDF] in the SCO bankruptcy for us to go over with a fine-toothed comb, this one from Pachulski Stang, their 20th bill. There is another from Tanner [PDF]. And we have finished doing the text of the exhibits to SCO's proposed sale, and I noticed some things in the trademark list I thought I might highlight. It always pays to do these text versions. You do notice things that otherwise don't seem to stand out.

First, I notice a trademark on the list is actually dead, WEBMIN, cancelled as of January of this year, so I think it might be useful to go through that list more carefully than SCO did. Certainly a potential buyer would want to know what it is actually getting, I would think. And creditors might want to know if the sale price makes any sense. And that's not the only odd thing.

There are some overseas UNIXWARE trademarks listed as registered years ago, 15 by my count and 2 in the US, but which SCO lists as "pending". Normally, something wouldn't be pending since the mid-90s. So that caught my eye, and I see there is a footnote:

(1) Assigned to X/Open Company Limited; X/Open's acceptance not confirmed as of October 15, 2007.
Say, what? I can't explain this, but there it is. Is SCO angling to get them back? Is this a footnote traceable to the Florida case? I simply don't know. I just highlight it.

Here's what I see when I search for the mark WEBMIN:

Word Mark - WEBMIN
Goods and Services - (CANCELLED) IC 009. US 021 023 026 036 038. G & S: computer software, namely, software that enables browser-based remote system network management and administration.
FIRST USE: 19971005. FIRST USE IN COMMERCE: 19971005
Mark Drawing Code - (1) TYPED DRAWING
Serial Number - 76013710
Filing Date - March 30, 2000
Current Filing Basis - 1A
Original Filing Basis - 1A
Published for Opposition - January 8, 2002
Registration Number - 2554885
Registration Date - April 2, 2002
Owner - (REGISTRANT) Caldera Systems, Inc. CORPORATION UTAH 240 West Center Street Orem UTAH 84057
Assignment Recorded - ASSIGNMENT RECORDED
Attorney of Record - Wesley L. Austin
Type of Mark - TRADEMARK
Register - PRINCIPAL
Live/Dead Indicator - DEAD
Cancellation Date - January 10, 2009
One might think that the footnote about the UnixWare trademarks being pending was SCO being extra scrupulous, but they weren't careful with this mark, so that makes less sense. I am sure in due time we'll find out what this is about. If you are living in any of the countries on the list and can check the history of these marks, that would be useful.

Here's the docket in the bankruptcy:

06/30/2009 - 823 - Interim Application for Compensation (Nineteenth) for Services and Reimbursement of Expenses as Accountants to the Debtors for the Period from June 1, 2009 through June 30, 2009 Filed by Tanner LC. Objections due by 7/20/2009. (Attachments: # 1 Notice # 2 Exhibit A # 3 Certificate of Service and Service List) (O'Neill, James) (Entered: 06/30/2009)

07/01/2009 - 824 - Schedules/Statements filed: Sch F,. /Third Amended Schedule F of SCO Operations, Inc. Filed by The SCO Group, Inc.. (O'Neill, James) (Entered: 07/01/2009)

07/01/2009 - 825 - Notice of Service /Notice of Amendments to Schedules of Liabilities and Time to File Claims in Response to Such Amendments Filed by The SCO Group, Inc.. (O'Neill, James) (Entered: 07/01/2009)

07/02/2009 - 826 - Affidavit/Declaration of Service of Epiq Bankruptcy Solutions Regarding Debtors' Motion for Authority to Sell Property Outside the Ordinary Course of Business Free and Clear of Interests and for Approval of Assumption and Assignment of Executory Contracts and Unexpired Leases in Conjunction With Sale (related document(s) 815 ) Filed by The SCO Group, Inc.. (Makowski, Kathleen) (Entered: 07/02/2009)

07/02/2009 - 827 - Monthly Application for Compensation (Twentieth) and Reimbursement of Expenses of Pachulski Stang Ziehl & Jones LLP, as Co-Counsel to the Debtors and Debtors in Possession, for the Period from April 1, 2009 through April 30, 2009 Filed by Pachulski Stang Ziehl & Jones LLP. Objections due by 7/22/2009. (Attachments: # 1 Notice # 2 Exhibit A # 3 Certificate of Service and Service List) (O'Neill, James) (Entered: 07/02/2009)

So three projects, if you are in the mood:
1. go down the list of trademarks and check if they are live marks.
2. check the pending list in your country.
3. look over the Pachulski bill to see if there's anything interesting in it.
One thing I notice is they have the March 30th hearing transcript. I'll try to get it for us soon. It goes public on July 8:
04/09/2009 - 739- Transcript regarding Hearing Held 3/30/2009 Remote electronic access to the transcript is restricted until 7/8/2009. The transcript may be viewed at the Bankruptcy Court Clerk's Office. [For information about how to contact the transcriber, call the Clerk's Office] or [Contact the Court Reporter/Transcriber Doman Transcribing, Telephone number (856)435-7172.] (RE: related document(s) 727 ). Notice of Intent to Request Redaction Deadline Due By 4/16/2009. Redaction Request Due By 4/30/2009. Redacted Transcript Submission Due By 5/11/2009. Transcript access will be restricted through 7/8/2009. (BJM) (Entered: 04/09/2009)
Another strange thing I can't explain in the list of exhibits. I see a lot of equipment listed for the UK subsidiary on Schedule 5.22, if I have understood the exhibit properly. But as I mentioned once before, a SCO SEC filing back in April of 2003, this 10Q said the UK sub was being shut down:
In March 2003, in connection with management’s decision to establish strategic European headquarters in Dublin, Ireland, and the Company’s United Kingdom (“UK”) subsidiary, SCO Group, Ltd, not performing at expected levels, the Company determined that SCO Group, Ltd would be wound up. On March 26, 2003, the board of directors of SCO Group, Ltd., obtained administrative relief in accordance with Rule 2.2 of the Insolvency Rules 1986 of the UK. In connection with the approved administrative relief, the operations of SCO Group, Ltd. were transferred to an administrator that was appointed by the court to complete the winding-up process. As of April 30, 2003, the operations of SCO Group, Ltd were no longer under the control of the Company and the Company had been released of any liabilities in exchange for the net assets of SCO Group, Ltd. The Company has included in its statement of operations for the three and six months ended April 30, 2003, the operations for SCO Group, Ltd., for the entire periods.

In connection with the winding-up of SCO Group, Ltd.’s operations, the Company incurred charges for severance and related payments for employees totaling $972,000. As a result of the administrative relief and transfer of SCO Group, Ltd to the administrator, the Company reversed $836,000 of previously recorded accruals related to the leased facilities in the UK, of which $415,000 was recorded in connection with the Tarantella Acquisition. The winding-up of SCO Group Ltd resulted in a net restructuring charge during the quarter ended April 30, 2003 of $136,000.

Now, according to the proposed sale, the UK subsidiary would be sold to unXis, minus certain excluded assets. The equipment list includes purchase dates both before and after this SEC filing date. And SCO lists leases for the UK too. There may be a perfectly logical explanation, but I don't know what it is. Overall, the general sloppiness makes me wonder if this proposed sale document was ever meant to be real.

Update: I see I replicated the Tanner bill, which I posted earlier. Too many filings at once, and I lost track. I haven't read it yet, so I'll post anything I see of interest in it here.

Update 2: I checked the US trademark office for any UNIXWARE marks. It lists only one live one, and the owner is X/Open, nothing pending about it that I can see:

Word Mark - UNIXWARE
Goods and Services - IC 009. US 021 023 026 036 038. G & S: Operating system software.
FIRST USE: 19921214. FIRST USE IN COMMERCE: 19921214
Standard Characters Claimed
Mark Drawing Code - (4) STANDARD CHARACTER MARK
Serial Number - 78833448
Filing Date - March 9, 2006
Current Filing Basis - 1A
Original Filing Basis - 1A
Published for Opposition - December 19, 2006
Owner - (APPLICANT) X/Open Company Limited CORPORATION ENGLAND Thames Tower, 37-45 Station Road Reading, Berkshire UNITED KINGDOM RG1 1LX
Attorney of Record - Evan A. Raynes
Prior Registrations - 1390593;1392203
Type of Mark - TRADEMARK
Register - PRINCIPAL
Live/Dead Indicator - LIVE
Note that SCO lists two as pending with the following application numbers, 74/433,402 and 74/433,508. The USPTO lists them both as serial numbers and as DEAD marks. *508 is a drawing:
Typed Drawing
Word Mark - UNIXWARE
Goods and Services (CANCELLED) IC 009. US 021 023 026 036 038. G & S: computer programs for functioning as a compiler, translator and debugger for use with computer languages; computer programs for accessing networks; transaction processing software; graphical use interface software; computer graphics software; and data management software. FIRST USE: 19921214. FIRST USE IN COMMERCE: 19921214
Mark Drawing Code - (1) TYPED DRAWING
Serial Number - 74433508
Filing Date - September 3, 1993
Current Filing Basis - 1A
Original Filing Basis - 1B
Published for Opposition - December 30, 1997
Registration Number - 2241666
Registration Date - April 27, 1999
Owner - (REGISTRANT) SANTA CRUZ OPERATION, INC., THE CORPORATION CALIFORNIA 400 ENCINAL STREET LEGAL DEPARTMENT SANTA CRUZ CALIFORNIA 95060

(LAST LISTED OWNER) X/OPEN COMPANY LIMITED CORPORATION UNITED KINGDOM Thames Tower, 37-45 Station Road Reading, Berkshire UNITED KINGDOM RG1 1LX

Assignment Recorded - ASSIGNMENT RECORDED
Attorney of Record - Wesley L. Austin
Prior Registrations - 1390593;1392203;1666671;1780785;1848735;AND OTHERS
Type of Mark - TRADEMARK
Register - PRINCIPAL
Live/Dead Indicator - DEAD
Cancellation Date - February 4, 2006

The Assignment page shows that SCO assigned it to X/Open as of June 5, 2006:
Reel/Frame: 3321/0540 - Received: 06/05/2006 - Recorded: 06/05/2006 - Pages: 6

Conveyance:
ASSIGNS THE ENTIRE INTEREST
Assignor:
THE SCO GROUP, INC.

Assignee:
X/OPEN COMPANY LIMITED
APEX PLAZA, BLOCK A, 2ND FLOOR, FORBURY ROAD
READING, BERKSHIRE, UNITED KINGDOM RG1 1AX

Correspondent:
EVAN A. RAYNES
FINNEGAN, HENDERSON, ET AL.
[address]

The other one, *402, is also a drawing, also assigned to X/Open the same date:
Typed Drawing
Word Mark - UNIXWARE
Goods and Services - (CANCELLED) IC 009. US 038. G & S: operating system software. FIRST USE: 19921214. FIRST USE IN COMMERCE: 19921214
Mark Drawing Code - (1) TYPED DRAWING
Serial Number - 74433402
Filing Date - September 3, 1993
Current Filing Basis - 1A
Original Filing Basis - 1A
Published for Opposition - April 26, 1994
Registration Number - 1845474
Registration Date - July 19, 1994
Owner -(REGISTRANT) UNIX SYSTEM LABORATORIES INC. CORPORATION DELAWARE 190 River Road Summit NEW JERSEY 07901

(LAST LISTED OWNER) X/OPEN COMPANY LIMITED CORPORATION UNITED KINGDOM Thames Tower, 37-45 Station Road Reading, Berkshire UNITED KINGDOM RG1 1LX
Assignment Recorded - ASSIGNMENT RECORDED
Attorney of Record - Wesley L. Austin
Type of Mark - TRADEMARK
Register - PRINCIPAL
Affidavit Text - SECT 15. SECT 8 (6-YR).
Live/Dead Indicator - DEAD
Cancellation Date April 23, 2005

Update 3: In light of the recent tax ruling against Xilinx, which they detail in a SEC filing and which is commented on by the Wall Street Journal, what does Schedule 5.4(b), Authorized Equity in Purchased Subsidiaries, mean? Anything? And how can Canada have 100,000,000 authorized shares? The UK one million? Has that always been so? From the Xilinx filing:

On August 30, 2005, the Tax Court issued its opinion concerning whether the value of stock options must be included in the cost sharing agreement with Xilinx Ireland. The Tax Court agreed with the Company that no amount for stock options was to be included in the cost sharing agreement, and thus, the Company had no tax, interest, or penalties due for this issue. The Tax Court entered its decision on May 31, 2006. On August 25, 2006, the IRS appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.

The Company and the IRS presented oral arguments to a three-judge panel of the Appeals Court on March 12, 2008. On May 27, 2009, the Company received a 2-1 adverse judicial ruling from the Appeals Court reversing the Tax Court decision and holding that the Company should include stock option amounts in its cost sharing agreement with Xilinx Ireland. The Company does not agree with the Appeals Court decision and is reviewing its alternatives as a result of the decision.

From the Wall Street Journal's explanation of the significance of the ruling:
In a decision that could have wide tax implications for U.S. multinational companies, a federal appeals court handed a victory to the Internal Revenue Service in a dispute over how companies allocate their costs between different countries....

The case involves so-called transfer pricing, the complex arrangements companies use to allocate costs and revenue between operations in different tax jurisdictions....

In Xilinx's case, the San Jose, Calif., company allocated a portion of its research and development costs to an Irish subsidiary. However, when it came to stock options granted to the company's research employees, Xilinx kept in the U.S. the entire value of the tax deductions related to those options. None of the deductions were allocated to the subsidiary in Ireland, where corporate income-tax rates are significantly lower than in the U.S., thus lowering Xilinx's global tax burden.

I know nothing about this area of law, and I don't understand SCO's list, so I will have to leave it to those more knowledgeable than I what it all means, if anything. As I understand the WSJ's coverage, it seems it could impact any international company, depending on how they do their taxes.

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