Judge Says SCO, Novell Trial Can Proceed

Nov 28, 2007 (12:11 PM EST)

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A judge overseeing The SCO Group's bankruptcy proceedings has ruled that a trial to determine how much the company owes to Novell for improperly selling Novell's Unix software may proceed prior to the completion of SCO's Chapter 11 hearings.

Acting on a request from Novell, District of Delaware bankruptcy court judge Kevin Gross on Tuesday ruled that the trial may proceed.

The trial was originally scheduled to begin in September in Utah federal court -- but was postponed pending the outcome of SCO's bankruptcy petition. In ruling, Gross effectively agreed with Novell's contention that further delaying the trial could harm its interests.

SCO recently asked the bankruptcy court for permission to sell off certain Unix assets to York Capital Management, a private investment group, but withdrew the request after Novell and IBM told the court that SCO's ownership of the assets is questionable. IBM called SCO's description of the assets it has agreed to sell to York "impenetrably vague." IBM also contended that it holds copyrights in some of SCO's Unix-based products and that SCO, therefore, does not have the right to sell them.

Following a long running legal dispute between the two companies, a Utah federal court judge in August ruled that Novell, and not SCO, owns the copyrights to the Unix operating system. As a result, the judge further ruled that SCO must remit to Novell revenues it earned from selling Unix licenses through a program known as SCOSource.

The total could exceed $25 million -- more than the combined worth of SCO's current assets. SCO filed for bankruptcy shortly after the August ruling.