Novell Asks Court to Lift Stay of SCO Trial, Urging Swifter Resolution

While countless observers of the absurdly long SCO trials against IBM and Novell have already stuck their proverbial forks in the matter, after SCO's Chapter 11 bankruptcy filing last month, Novell filed a motion in Utah District Court last week arguing that lifting a stay of SCO's lawsuit against it would not only be beneficial in the long run, but may actually be beneficial to SCO's survival.

"The District Court Order has special importance for SCO's attempt to reorganize," argued Novell's attorneys. "It already makes SCO's current business model questionable. The only periods in which SCO appears to have been profitable are those periods in which it generated substantial one-time revenues through transactions wrongfully based on Novell's property [licensing of its UNIX trademarks and copyrights for royalties]. When not based on Novell's property, SCO's historic business model does not appear to be profitable or provide SCO with reasonable prospects for reorganization."

In other words, as long as SCO continues to do business under its current system, it's using Novell's IP as a foundation. Any reorganization should take into account creating a new foundation for SCO, and it can't do so until the Utah court lets SCO let go of its claim to the old one.

"With those issues resolved," the motion continues, "precisely how much of SCO's past income is attributable to its wrongful use of [Novell's] SVRX copyrights will be clear. SCO can then turn its focus to trying to create a sustainable business model or other strategy in furtherance of its attempt to confirm a reorganization plan."

In an affidavit in support of Novell's motion, the company's vice president for technology law, Greg Davis, estimated the amount Novell is owed in royalties may actually not be all that much: between $500,000 and $800,000. Originally SCO had agreed to give all these collected trademarks to Novell, Davis stated, then receive 5% back for an administrative fee. In actuality, he said, SCO had been paying Novell 95% of the royalties it collected and keeping the 5%...until it just decided to stop paying.

While trial observers have been predicting fireworks, Novell's motion appears to present SCO with at least one option where it avoids getting burned too severely. Perhaps it could simply agree to pay Novell under a million, however and whenever it can - pursuant to the decisions of its court-appointed financial managers under Chapter 11 - and get on with its business, whatever business that might be.

In a comment to Computerworld this morning, SCO President and CEO Darl McBride stated it's too early to be sticking forks in his company just yet. But rather than signal his company's interest in reorganizing under a new set of principles, McBride chose instead to rally hope in a potential rise from the ashes...in the courtroom. "One bad ruling does not a full legal conclusion make," he said.