It's time for SCO to face the Novell music

. . . keeping an eye on the penguin

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Nov. 27, 2007

When SCO filed for Chapter 11 bankruptcy, it was widely seen as a move to avoid the final steps in its case with Novell. On Nov. 27, however, the bankruptcy court lifted its stay on the Novell trial, and so the SCO/Novell court case is once again free to proceed.

In his decision, "Granting Novell's Motion for Relief from the Automatic Stay to Proceed with the Lawsuit" (PDF link), U.S. Bankruptcy Court Judge Kevin Gross ruled that while "The automatic stay is one of the most fundamental protections provided to the debtor under the Bankruptcy Code," ... "the automatic stay is not meant to be absolute, and in appropriate instances relief may be granted."

In the case of SCO's bankruptcy, an important issue is that the "Debtors [SCO] moved to sell substantially all of their assets. Without a ruling on the Liability Issues it was unclear if the sale would adversely affect Novell's rights. Debtors subsequently withdrew the sale motion [story], but the problem remains."

Judge Gross also considered that since the SCO/Novell case had been days away from trial and Novell was probably going to be the winner, Novell's request for the stay on its case should be lifted. Finally, Judge Gross noted that Utah District Court Judge Dale Kimball had already "issued a thorough 105-page opinion carefully analyzing the facts and law. The District Court's mastery of the facts and law pertaining to the Lawsuit is a powerfully important consideration in the Court's decision to lift the stay."

Even SCO was forced to admit that the SCO/Novell case "involves many highly technical issues that the District Court has already addressed and mastered. Debtors [SCO] concede that it is unreasonable to expect this Court to spend a significant amount of time learning and resolving the Liability Issues when the District Court already has the knowledge required to adjudicate the Liability Issues."

Leaving the legal jargon behind, Gross decided that since the Novell case was both so far advanced and likely to determine how much, if any, assets SCO would have left for its bankruptcy, the U.S. District Court will now need to reschedule the SCO/Novell case. When we left that case, Judge Kimball had decided that he alone, and not a jury, would hear the case and make a decision after a five day trial. Before that Kimball had already ruled, in what was widely seen as a death stroke to SCO's courtroom chances, that Novell, and not SCO, owned Unix's IP (intellectual property)..

Even if Kimball, as expected, rules against SCO, it may not be the end of SCO's trials, however. Besides the still-pending bankruptcy case, SCO has already indicated that it will appeal Judge Kimball's decision.

-- Steven J. Vaughan-Nichols

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