NeoMedia Technologies, Inc (NEOM)

[clawmann]

DM: I think you need to read again the press release about the terms of the cross-licensing agreement that ended the Neom/Scanbuy cases.

If I recall correctly:

1. Neomedia received a "fully paid" license of Scanbuy's patents. That "fully paid" business means that Neomedia owes Scanbuy nothing when Neomedia uses the concerned Scanbuy patents. Second, the reference to "fully paid" does not mean Neomedia paid Scanbuy any cash to get that license. It is a "recital of consideration", most likely meaning that the consideration Neomedia gave for that license was its agreement to drop its lawsuit against Scanbuy. Since a right to sue is a valuable asset, agreeing not to sue (or to drop a suit) wouild, in and of itself, constitute adequate legal consideration to support that "fully paid" language.

2. On the other hand, Scanbuy's license of Neomedia's patents does require on-going royalties from Scanbuy to Neomedia.


The language from the PR:

NeoMedia Technologies Inc. and Scanbuy Inc. announced they have settled all pending litigation between the companies and have granted non-exclusive patent licenses to each other. NeoMedia and Scanbuy have agreed to terminate all pending litigation brought by NeoMedia against Scanbuy in 2004, and by Scanbuy and Marshall Feature Recognition, LLC ('MFR') against NeoMedia in 2008. In addition, NeoMedia has granted Scanbuy a royalty bearing, non-exclusive license to a portion of its patent portfolio in the U.S. In turn, Scanbuy has granted NeoMedia a fully paid, irrevocable, non-exclusive license of Scanbuy patents and a fully paid, non-exclusive sublicense to all of the patents licensed by MFR to Scanbuy within the U.S. This agreement will enable consumer brands, advertising agencies and mobile operators to confidently engage with either company to implement mobile barcode solutions in the U.S. The technology has enormous potential to become a viable and widely adopted communication channel.


And the Settlement and License Agreement (which was filed with the 8K on this event), contains a section headed "Payments". In that section there is one and only one sentence: "Scanbuy’s payment obligations to NeoMedia shall be set forth in Exhibit D.". Exhibit D is not public information, so I do not know what Scanbuy's exact payment obligations are; but I do know that the Settlement and License Agreement has no similar statement about Neomedia's payment obligations. Again, the absence of such a statement is completely consistent with the "fully paid"
language.

Also, the Settlement and License Agreement has the following provision:

"As a condition for granting the licenses and releases in this Agreement, within ten (10) days from the Effective Date Scanbuy shall file with the appropriate patent office papers to withdraw all opposition proceedings or other adverse proceedings which seek to invalidate any NeoMedia intellectual property right, including those related to any NeoMedia (or a foreign Affiliate’s) pending patent application anywhere in the world. Scanbuy shall inform NeoMedia promptly when the request to withdraw the opposition or other adverse proceeding has been made, and where those proceedings had been pending."