To most who practice it, technology is a religion. So it will come as no surprise that one amongst us now claims to have discovered the “true Cloud,” the Cloud beyond simple development, the Cloud that brings us to the nirvana of serious application deployment and production via the cloud.

OpSource, our modern day St. Helena, says the true Cloud, which it’s unveiling as we speak, combines the availability, flexibility and community of the consumer cloud with the more ineffable security, performance and control that the Fortune 1000 demand. Like any viable religion, it has a little something for everybody.

The seven-year-old company, whose financing (including debt financing) tops $67 million, more than enough to pay for any expedition to find the “true Cloud,” has had this “first-of-a-kind” widgetry, singularly called the OpSource Cloud, in private beta and is now revealing it to all and sundry in the expectation of mass conversions that may involve abjuring if not IBM and Amazon – which is now claiming a “true Cloud” of its own – then at least Rackspace once it’s available on October 2.

The company’s had 20 companies beta testing the stuff and 100 are reportedly pre-sold.

OpSource Cloud, which will expand the company’s existing business – already responsible for billions of transactions a day – from SaaS to the enterprise, means to provide every user with a “Virtual Private Cloud” within the public cloud and let them decide how much they want to be connected to the public Internet – anywhere from totally available to shy and totally private.

Since security is key to enterprise adoption cloud computing OpSource is letting the IT department manage its security as it would back home in its internal infrastructure – like using customized firewalls.

Like Amazon started promising the other day, an OpSource Cloud user will get a Virtual Private Network (VPN) backed by a 100% uptime Cisco Layer 2 SLA. Access is through a web-based control panel or APIs.

OpSource says its high-performance multi-tier architecture (difference from the usual flat cloud and with guaranteed latency in between systems and sub-millisecond access time) is set up for user-level logon and passwords, operational permissions and department and sub-departmental reporting. None of your typical single-user, one big user name and password root access malarkey.

It’s using VMware for virtualization and application portability between the cloud and the enterprise. It’s also offering Red Hat and Windows and MySQL as well as EMC and NetApp storage.

Despite all this privacy business, it’s not offering any dedicated hardware.

There’s the usual online sign-up and pay-by-the-hour usage, no commitment, and centralized billing with sub-account budgeting and permissions and reporting.

CEO Treb Ryan said to figure 12 cents-50 cents an hour per single-CPU server, 1GB of memory, a 50GB drive and either Windows or Red Hat.

Unlike Amazon, OpSource is offering 24×7 handholding, ticketing and status tracking and its SLA is better. There’s about the same control over spend.

Initially the virtualized infrastructure OpSource will offer belongs to NTT America, one of its many investors, and is located in Northern Virginia.

Existing OpSource customers include Adobe, Oracle, Symantec, Business Objects, BMC, McAfee, General Mills, ABC and Mattel.

Arista Networks, the so-called “cloud networking” start-up that began life by challenging Cisco with an ultra-fast network switch that cost a tenth the price of a Cisco switch, is closing in on the problem of redesigning the network to support large data centers and cloud computing that it was started by Andy Bechtolsheim to solve.

The company’s premise is that existing networks aren’t designed for virtual and mobile workloads.

See, along with virtualization has come an explosion of virtual machines over physical servers by a factor of 10x-20x creating in turn a proportional sprawl of virtual switches to connect the VMs in the physical servers.

Arista contends that this combination of multi-core CPUs, VMs and virtual switch infrastructure is making untenable demands on the underlying cloud network fabric. The traditional 64:1 oversubscribed network topologies don’t cut it.

Too much latency.

It says the industry needs seamless user-to-VM, VM-to-VM, VM-to-physical machine access and that the network needs to be redesigned for non-blocking any-to-any cloud networks, as well as peak bandwidth of terabit scale.

The situation, it says, calls for consistent physical, virtual and cloud networking. It also calls for consistent, holistic management across virtual and physical networks during VM migration.

Naturally, Arista’s got a fix.

It claims to have the first network product to bridge physical, virtual and cloud networks.

And naturally it involves its Ethernet switches.

Essentially its switching platform is now integrated with virtual machine management and cloud reach.

It says it can link physical, virtual and cloud networks using VMware, a close ally of Cisco and an early investment of Bechtolsheim, the man with the golden touch who co-founded Sun and was Google’s first investor.

Arista’s got a newfangled virtualized Extensible Operating System (vEOS) that’s supposed to bring hitless upgrades, network troubleshooting and configuration to VMware’s vSphere 4.

vEOS is an vSphere-linked implementation of Arista’s existing modular Extensible Operating System (EOS) that manages VMware’s distributed switches.

It auto-discovers all vSwitches and VMs in a vDS domain and provides an interface for network administrators to establish consistent policy and accounting.

Arista’s magic is supposed to be in its software, which it developed long before its silicon, and EOS separates state from different processes and stores all of the state of networking variables and inter-process communications in a transactional database.

Anyway, vEOS is supposed to move workloads from physical servers to virtual machines and to cloud infrastructures while maintaining segmentation, trust boundaries and policy control.

With VMware’s vConverter it moves network state from the physical port to the logical port and with vSphere it binds state to each mobile VM.

It integrates with VMware’s vCenter virtualization platform so there’s a familiar network interface and offers consistent policy and accounting for physical ports, virtual machines and cloud deployments.

Arista president Jayshee Ullal – a Cisco alum like Bechtolsheim, von Bechtolsheim actually, and other senior Arista folk – says that with vEOS, tricked out as a virtual appliance or an integrated EOS feature, Arista and VMware customers will be able to manage their growing converged networking infrastructure and move VMs around more easily.

The widgetry is meant to address the need to manage hybrid virtual and physical infrastructures with multiple network operating systems.

So it manages VMware’s vNetwork Distributed Switch and links physical and virtual machines to network policy and profiles.

Arista claims virtualization is creating a management gap between physical and virtual networks. vEOS is supposed to offer administrators a familiar, industry-standard network interface for configuration and monitoring without throwing a monkey wrench into the virtualized infrastructure.

vEOS is described as a single system image that runs on Arista’s 7000 family of cloud networking switches as well as a VMware virtual appliance.

Arista observes that with vSphere 4’s new capabilities such as Dynamic Resource Scheduler (DRS) and Fault Tolerance, VMs move from one host to another automatically. It reckons this demands an order-of-magnitude more capacity, lower latency and new network architectures.

vEOS, which supports third-party application development, is also supposed to bring monitoring and troubleshooting capabilities to virtualized environments including HP Openview support, standard SNMP monitoring and fully integrated access control while integrating with VMware Fault Tolerance to provide high availability for the vEOS virtual appliance.

Arista says it will be signing up customers for the open beta of vEOS starting in October or November. It won’t be available until the fourth quarter. Preliminary pricing suggest a 64-host network configuration license will run $5,000; 64 hosts per vEOS instance translates into 12,800 VMs.

Arista was founded on Andy and his partner Arista chief scientist David Cheriton’s nickel. With no one else funding it, Arista isn’t worried about meeting milestones or chasing more VC money. Its 10 gigE switches have been shipping for the last year.

See www.aristanetworks.com/veos/beta.

Andy Bechtolsheim’s Off Reinventing the World Again
Gee Willikers, This i4i Story Gets Better and Better
Amazon Goes into the Hybrid Cloud Business
Dell Battered But Still Breathing
OpSource Unveils the ‘True Cloud’
SCO Trustee Named
Free Software Foundation Aims To Hurt Microsoft Where It Lives
SAP Told To Fork Over ~$139m in Patent Case
Intel Reaches Out for Parallel Programming Help
Zetta Wrestles, Claims To Pin Down the Data Demon
Apple To Spring Snow Leopard on August 28
NetApp Heads Deeper into the Cloud
Nokia To Launch Netbook Called Booklet
Tibco Buys DataSynapse
Mimecast’s Cloud E-mail Management Claims Functional Parity with On-Premise Widgetry
Xangati Pushes into Virtualization
Elastic Bamboo Revved
Appirio Leverages Force.com
Novell Revenues Unexpectedly Down 12%
Asustek Shelves Android Netbook
Jobs Reported Micromanaging Tablet Development
Cisco’s WebEx Boss Bolts to Salesforce.com
ITC Open Flash Probe
Acer Numbers Down
Coleman To Advise 3Tera
Larry Bought for a BuckRackspace Launches Cloud Ecosystem Portal
Rackspace Launches Cloud Ecosystem Portal
Parallels Simplifies PC-to-Mac Switch
Google Docs To Feature Tower of Babel

The now bald-as-Bruce-Willis ex-Netscape wunderkind-recently-turned-VC Marc Andreessen, roundly trounced by Microsoft and its Internet Explorer widgetry 15 years ago, is underwriting an early-stage browser start-up called RockMelt about which little to nothing is known other than its disruption-suggesting logo.

According to a piece in the New York Times that ran last Friday RockMelt is the work of two ex-Opsware guys Eric Vishria and Tim Howes, Opsware being the ISV that Andreessen sold to HP for a cool $1.6 billion two years ago. Its principal engineer is Robert John Churchill, who was Netscape’s principal engineer.

It may or may not be different than IE, Firefox, Safari, Chrome and “social browser” Flock.

It may or may not be built from scratch and attuned to the web as it is now.

It may or may not be for Facebook, where Andreessen serves on the board, the social network that – come to think of it – Microsoft owns a piece of.

A RockMelt web page that – poof! – disappeared (and Read Write Web captured) suggested that the browser may be tailored to Facebook users via Facebook Connect.

On the other hand it may or may not be general-purpose.

SpringSource Wednesday trotted out an Enterprise Java Cloud, an announcement that’s supposed to shed some light on the synergies between SpringSource and the cloud-smitten VMware, which said last week that it’s buying SpringSource for upwards of $400 million.

Seems the acquisitive SpringSource, in turn, recently bought Platform-as-a-Service start-up Cloud Foundry Inc, the source of its shiny new Enterprise Java Cloud, which at the moment is called SpringSource Cloud Foundry. No price was mentioned.

The widgetry lets developers deploy and manage Spring, Grails and Java applications in a public cloud environment.

SpringSource says it’s the first vendor to offer a “self-service, pay-as-you-go public cloud deployment platform for full-feature Java web applications that unifies the entire build, run and manage application lifecycle for Java.”

Cloud Foundrty is currently in beta and works on Amazon EC2.

Next thing you know it’ll work on VMware’s vCloud and in its vSphere environments.

SpringSource means to give developers “a constant experience over both public and private clouds, according to CEO Rod Johnson. He says that kind of unified approach doesn’t exist.

VMware said it was buying SpringSource for an application platform that can be used to build, run and manage applications on both internal and external cloud architectures.

Cloud Foundry is built on the open source Cloud Tools project and is being integrated into SpringSource’s solutions.

It reportedly launches and automatically scales Java web applications in the cloud in a few mouse clicks.

SpringSource says it automates common deployment blueprints and does intelligent, SLA-driven resource allocation with automatic scaling and infrastructure repair.

Cloud Foundry builds on the Java technologies that SpringSource is known for. The core runtime is its popular enterprise-class tc Server product, built on Apache Tomcat. It uses the Apache HTTP web server for load balancing and provides a MySQL relational database.

Johnson says Cloud Foundry lets the user specify the desired application server and database configuration through a web interface the conceals the complexity of what’s going on, “ensuring that the required steps reflect the intent rather than the details and that configuration and deployment is repeatable.”

The whole programming and deployment model is built on open source.

Within the next 90 days, the free Eclipse-based SpringSource Tool Suite (STS) will offer direct deployment of Java applications through Cloud Foundry into the public cloud.

Meanwhile, Hyperic, another recent SpringSource acquisition, has got a thing called CloudStatus that’s supposed to be the first service to provide an independent view of the health and performance of public clouds.

It gives Cloud Foundry cloud health monitoring data.

Users will also get Hyperic HQ-powered functionality for insight into application performance and service levels.

SpringSource says Hyperic HQ integrates closely with Cloud Foundry’s technology to automatically scale cloud deployments based on an “acute” understanding of how the applications are working and interacting with other IT resources.

That makes Cloud Foundry the only cloud solution on the market with this capability.

According to Enterprise Management Associates VP of research Andi Mann, “For companies where the cloud deployment option makes sense, SpringSource has a killer offering.”

Johnson said, “Unlike competitive offerings, our cloud service does not come with compromises; companies can deploy full-feature Java web applications, built using SpringSource tools. C-level technology executives can seamlessly add cloud computing as a strategic option as part of their development roadmap.”

Chris Richardson, the former president and founder of Cloud Foundry, is now head of cloud development at SpringSource and his team has reportedly gone with him.

See CloudFoundry.com for the beta. Normal cloud service provider fees naturally apply.

The company says pricing will be announced after an extended beta period and follow standard cloud service pricing models.

It’s also expecting to extend Cloud Foundry’s capabilities with enhanced cloud management features and other services.

Johnson says they’ll enhance runtime visibility into Spring and Grails applications – after Cloud Foundry is integrated into STS they’ll work on Grails integration – but what SpringSource really has in mind is a “fully integrated stack in which the application framework and application server work closely with the cloud infrastructure to deliver the best possible experience.”

Cloud Foundry is not limited to Spring and Grails applications either.

Oh, Look, SpringSource Has an Enterprise Java Cloud
Netscape 2.0? Andreessen Funds Browser Start-up
Microsoft Seeks Stay of Word Injunction
DOJ Waves Oracle-Sun Through
Terracotta Buys Ehcache
NetApp CEO Steps Down
Boy, Is HP Glad It Bought EDS
Another Desktop Virtualization Start-up Emerges from Under the Radar
HyTrust Upgrades
Andreessen’s New Fund Backs Apptio
NetSuite Kicks Off its Own “Cash for Clunkers” Program
The Open Group Forms Cloud Work Group
Tata Communications To Offer HyperOffice
Oracle in Bed with Israeli Start-Up
CA Gets Seat on Open Cloud Standards Incubator Board
Tata Offers DDoS Protection
Dell Shows Phone ‘Prototype’ in China
SCO Releases Virtualized Version of OpenServer
Red Hat Remakes its Reseller Program
Linux Foundation Updates Study on Linux Development
Moonlight 2 Beta Out
IBM Moving to PaaS
Is Apple’s Head in the Cloud Too?
Carly Preps for Senate Race
EnterpriseDB Co-Founder Leaves
Jobs Seems To Fancy ‘No Poaching’ Deals
Larry Dethroned
Acer To Sell Netbook with Two Operating Systems: Report
OpSource Funding Now Tops $67m
HP Sees No Magic in Windows 7
Google Apps Script Released
Nokia Looking at Netbooks
HP May Dump BPO: Reuters
Bing Share Inches Up Again
Reyes’ Backdating Conviction Overturned
Microsoft Hit with Two More Patent Suits
CTP of SQL Azure Out
Unpaid Linux Outpacing Paid Linux

Concerns have been raised that Tuesday’s Great Word Injunction could beget a bunch of nasty children.

i4i chairman Loudon Owen told Redmond Magazine, which got a more detailed audience with him than most – we got as far as the idea that Microsoft might get a stay, he went into a snit about “It’s our technology and we’re going to get paid for it” then found something else to do promising to call back and never did – anyway, he suggested to Redmond Magazine that there might be other offenders out and that Microsoft’s broader Office Open XML (OOXML) document format technology – you know, the controversial ISO/IEC standard 29500 – might be implicated.

It appears that Owen thinks the i4i patent is “potentially integral to the standard.”

Redmond Magazine also touched base with Burton Group research director Guy Creese, who said that the next version of the OpenDocument Format (ODF) – the rival ISO/IEC standard – could have a problem.

The current ODF 1.1 is clean but, he said, “ODF 1.2 will move to a similar custom schema that OOXML has.”

Gartner analyst Brian Prentice is also wondering about the patent’s impact on ODF. “But, if the validity of the patent is upheld,” he writes, “then the immediate question is whether this will also impact ODF. If so, then this turns out to be a significantly more important issue and one which will crystallize the fury of the anti-patentistas. No longer will this be the source of some Schadenfreude at Microsoft’s expense. This will be seen as yet another attack on open standards and open software.”

Prentice has been thumbing through the i4i patent and thinks it “might actually have some legs.”

“Keep in mind,” he says, “that this claim was filed back in 1994. The claim considers the existing state of the art at that time – formats like TROFF, RFT and SGML – before asserting that ‘in sharp contrast to the prior art the present invention is based on the practice of separating encoding conventions from the content of a document. The invention does not use embedded metacoding to differentiate the content of the document, but rather, the metacodes of the document are separated from the content and held in distinct storage in a structure called a metacode map, whereas document content is held in a mapped content area. Raw content is an extreme example of mapped content wherein the latter is totally unstructured and has no embedded metacodes in the data stream.’”

It suggests to him that “this is not a typical rubbish software patent” and 15 years ago would seemed an “innovative idea,” which lead him to “another interpretation that I fear will be lost in the noise. That is some introspective consideration of whether there is actually a rampant disregard in the software industry for other’s property rights. If it is not just .docx but also ODF that infringes then that could be seen as some pretty significant oversight, potentially even arrogance, on the part of Microsoft, Sun Microsystems and OASIS. And given that Microsoft was aware of i4i’s patents, one wonders why they didn’t just buy them (at a significantly reduced price then what they might end up paying now) and then target ODF for license agreements like they’re doing with their patent infringement claims against Linux.”

We asked Owen about i4i’s negotiations with Microsoft back in 2001 and after. He was reluctant to say more than they “didn’t end in a commercial agreement,” but it seemed odd when he said he didn’t know what Microsoft’s objections were and left the impression that i4i was quick to take corrective action although it didn’t file suit until March of 2007.

The notoriously plaintiff-leaning US District Court for the Eastern District of Texas issued a permanent injunction Tuesday prohibiting Microsoft from selling any Microsoft Word products in the United States that “have the capability of opening .XML, .DOCX or DOCM files (XML files) containing custom XML.”

Microsoft, which means to appeal, must comply with the injunction within 60 days.

The decision impacts the current Word 2007 as well as the Professional Edition of its predecessor Word 2003 and the upcoming Office 2010 (and affects, in turn, SharePoint server and SQL Server database) and implicates the feature, often demanded by the federal government, for creating custom tags to search files for specific information.

Custom tags, as you might suspect cover stuff other than the “name, rank and serial number” covered by standard XML tags.

PC World says custom XML lets people “create forms or templates such that words in certain fields are tagged and then can be managed in a database.” The devil of course is in the details.

According to Bloomberg Merck and Bayer use i4i’s widgetry to ensure people get the most up-to-date information on their medicine labels. But how widely the feature is used is debatable. From i4i’s web site, it looks like a pharma thing.

i4i chairman Loudon Owen, one of the financiers of the lawsuit, said the estimates submitted at trial are under seal, as is most of the suit, and he couldn’t say whether the number represented “2% or 10%” of Word’s installed base but it’s the growth rate he’s most interested in anyway. He can’t talk about that either since it’s “strategic” but it’s on the rise.

Anyway, Microsoft has also been ordered to pay Toronto-based i4i Inc $290 million after failing to persuade the judge to overturn the decision.

The judge Tuesday upheld the verdict a jury came down with in May awarding i4i $200 million after it found Microsoft willfully infringed an i4i patent covering a document system that relies on XML custom formatting.

The judge braced the decision by ruling that Microsoft should pay i4i an additional $40 million for its willful infringement plus slightly more than $37 million in pre-judgment interest, including an additional $21,102 a day until a final judgment is reached in the case and $144,060 a day until the date of final judgment for post-verdict damages.

The $40 million was more than the $25 million i4i suggested for willfulness.

Software covered by the 1998 patent removed the need for individual, manually embedded command codes to control text formatting in electronic documents.

Microsoft claims it did not infringe and that the i4i patent is invalid.

However, in 2001 when asked by the federal government for the ability to create custom tags in Word, the company brought i4i into the conversation and said i4i could supply the function. Microsoft then started its own development and i4i lawyers entered Microsoft e-mail into evidence that said it would “obsolete” i4i.

i4i lawyer Doug Cawley expects Microsoft to rush to the appeals court in New Orleans seeking an expedited stay of the injunction. One can imagine them arguing the state of the economy and the fact that Office 2010 is soon to make an appearance and nudge that economy along.

If Microsoft can’t get a stay, it will have to strip out the feature, disable it or come up with an acceptable workaround – or, heck, even license the darn thing – because in 60 days it can’t test, demonstrate or market any future Word product that opens an XML containing custom XML.

The injunction does not apply to any Word product that opens an XML file as plain text or when it opens an XML file “applies a custom transform that removes all custom XML elements.” The injunction does, however, allow Microsoft to continue to support existing custom XML users of products licensed or sold before the injunction takes effect.

An appeal is likely to take a year, Cawley said. He said he is confident i4i will survive the appeal.

The patent at issue, No 5,787,449, was invented by i4i founder Michel Vulpe but is owned by i4i LP, a licensing entity affiliated with i4i Inc. McLean Watson Capital, chaired by Owen, and Northwater Intellectual Property Fund are investors in i4i LP.

i4i has spent around $10 million on the litigation so far, according to Cawley. It could never have done it without investors. God only knows what Microsoft spent.

McKool Smith represented i4i.

Microsoft Word Ordered Off the US Market
i4i Fallout Could Be Widespread
VMware Buys Open Source Company
Penguin on Demand
Hadoop Co-Creator To Leave Yahoo
Microsoft & Nokia Aim To Go Stomp Blackberries
Windows Azure Runs into a Little Tax Problem
China Backs Off
Cloud Hype at Summit: Gartner
Gang of Four Creates Cloud BI Stack
EC Gets its Ears Boxed over Intel Case
CA Teams with Amazon
Permabit Launches Cloud Storage for Service Providers
Fortinet Files To IPO
HP’s Got a New Girlfriend Called LISA
Toshiba Turns Blu
Virtensys Raises $16M
BMC Acquires MQSoftware
SCO Watch
Oracle Trots Out VM Template Builder
SAP Rumored To Be Interested in Tibco
Oracle’s Date with Sun Dicey
Microsoft Changes Browser Default
Chinese To Bring in Lenovo Fixer
Google Gives OSL $300k
Dell Supposedly Launching Phone in China
Microsoft Gets its Own XML Patent
SQL Server 2008 R2 Goes CTP
Compiere Launches Exchange Hub
Google Joins NCSA Board
Bahrain Seeks Tenants

After a bankruptcy court hearing on July 27 that ran until 10:30 at night, Judge Kevin Gross went off to have a think about it and came back Wednesday with the decision to turn SCO over to a Chapter 11 trustee.

He denied everybody’s motions.

SCO can’t sell everything-but-its-litigation to Unxis. Novell and IBM can’t liquidate SCO on the spot and SCO’s current management presumably looses the jobs they’ve been angling to cling to. At least they’re no longer in control. The board is out at any rate.

So nobody gets what they wanted.

As Judge Gross points out his decision is “sua sponte,” meaning it’s his own idea and he says it’s based on the “unusual circumstances” that there might be something to the SCO litigation. He’s leaving it to the trustee to find out and then figure out what to do with SCO.

His decision advises the US Trustee’s Office (OUST) to go and find a retired judge or litigator to assess the litigation since that will be the trustee’s main job.

Whether OUST will or not is another matter since it sided with IBM and Novell in asking the court for a Chapter 7 conversion order.

Judge Gross’ decision presumably buys SCO the time to hear from the 10th Circuit Court of Appeals about whether or not it’s going to overturn the summary judgment handing Novell ownership of Unix.

It’s assumed that decision will be out by the end of August since one of the three judges who heard the expedited appeal is going off to teach at Stanford on August 31.

SCO obviously has Judge Gross’ sympathies.

Although he compares its “constant refrain of waiting for the litigation to succeed” to Beckett’s “Waiting for Godot,” he says his “decision is not intended as a criticism of debtors’ efforts or conduct. SCO found their Unix operating system under attack and sought redress through litigation. Their principal adversaries, IBM and Novell, are wealthy and have used their deep pockets in the litigation and in these bankruptcy cases to debtors’ disadvantage. As creditors, IBM and Novell are entitled to act in their self-interest and that is what they are doing. The reality is that eliminating debtors’ litigation against them is far more valuable to IBM and Novell than any recovery from debtors in the bankruptcy cases. The interests of debtors’ other creditors may differ.”

SCO fled to the bankruptcy court 23 months ago as Judge Gross says “to preserve litigation” against the imposition of a constructive trust by the federal court in Utah where Novell was looking for a judgment of $37 million, a claim that after a trial dwindled to $3.5 million, a sum that will shrink further if the 10th Circuit rules in SCO’s favor.

However, there are time limits in bankruptcy court and most of the sand has run out of SCO’s hourglass plus, as the judge says, it’s “an understatement to say that since the filing of their bankruptcy [SCO’s] financial situation has greatly declined.” It’s quickly going broke and has abandoned the idea of reorganizing and soldiering on in favor of selling out.

But it hasn’t had much luck with buyers either. The 11th hour conversion-avoiding sales agreement it put together in mid-June with Unxis for $5.25 million is full of holes.

Judge Gross says it’s unclear whether the price is fair especially since it’s just enough to get SCO out of bankruptcy court and the letter of credit ostensibly meant to pay a Novell judgment “terminates on December 31, 2009 with no guarantee that the Novell litigation will be concluded.”

The judge said he is “very disturbed that the sale agreement contains a provision (which [IBM and Novell] refer to a ‘poison pill’) requiring the transfer of assets to Unxis upon conversion or appointment of a trustee.” He feels it “calls into question whether the sale has a sound business purpose and raises doubts of the parties’ good faith. There is simply no record upon which the court can find that the sale is in the best interests of the creditors and the estate.”

He wants the trustee to figure out whether pursuing the litigation is in the best interests of the creditors and the estate. “The ‘potential’ of the litigation must, however, be weighed against the reality of the cost,” he said. “A trustee will be in a better position to make that assessment without the personal and emotional investment of SCO’s management. Similarly, a Chapter 11 trustee can evaluate an asset sale independent of debtors’ management’s pursuit of the litigation.”

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