Zeev: The patents that I listed are Wave's IP. Here are two frequently discussed patent issues.
Peter Sprague's security interest for royalties:
People from time to time fall prey to a basher-induced fallacy that Peter Sprague could walk away with Wave's IP.
Words to the following effect have been reiterated in Wave's SEC filings for years:
"Some of our patent rights derive from a license from Wave's Chairman, Mr. Peter J. Sprague, of his rights in these patents, and several agreements with former officers regarding their rights in these patents. The license agreement with Mr. Sprague requires us to make royalty payments to him and Dr. John R. Michener, a former officer, in a total amount equal to two percent of gross revenues less certain adjustments. This royalty payment is apportioned 75 percent to Mr. Sprague and 25 percent to Dr. Michener. The payment of royalties is secured by a security interest in and to our patents. We believe that these agreements as a whole provide us with exclusive rights under our patents. We cannot assure you, however, that we will enjoy exclusive rights to these patents under such agreements."
* * *
"In February 1994, the Company entered into an Amended and Restated License Agreement (the 'Agreement') with Mr. Peter J. Sprague, the Chairman and former Chief Executive Officer of the Company, and Mr. John Michener, then a shareholder and officer of the Company, whereby the Company was granted an exclusive license to make, have made, use, lease, sell or otherwise perform services covered by certain licensed patents (the "Licensed Patents") which are a fundamental part of the Company's product. The Agreement amends and restates certain license agreements entered into by the Company prior to February 1994.
"The Agreement provides for royalty payments to be made to the licensors in the aggregate amount of two percent of the total gross revenues derived by the Company and any sublicensee of the Company from the exploitation of the Licensed Patents, less any amounts paid, if any to (i) information and database providers for information distributed to or through the Company or its sublicensees, and to (ii) the Company's sublicensees for manufacturing the product or performing the services covered by the Licensed Patents. Royalty payments are payable quarterly and are to be apportioned 75% to Mr. Sprague and 25% to Mr. Michener.
"Payment of royalties is secured by a security interest in and to the Licensed Patents. Mr. Sprague assigned all of his right, title, and interest in the Licensed Patents to the Company.
"The Company believes that the agreements as a whole provide it with exclusive rights under the Wave Patents. There can be no assurance that the Company will enjoy exclusive rights to the Licensed patents under these agreements no payments have been made to date.
Titan's retained market:
I do not have all the answers about Wave's cross-licensing agreement with Titan. Although Titan is co-holder of the metering patent, it conveyed to Wave everything except a "retained market" in "government information," which is said to be defined in the agreement as information "used solely by a government entity." (I feel like Chris Farley with all of these quotation marks.)
I have never seen the agreement. I have only seen it described in SEC filings. Two questions that arise from the language of those descriptions follow:
(1) Is information transacted with government contractors, or with consumers of government goods or services, or with the public, "used solely by a government entity"?
(2) An addendum to the cross-licensing agreement granted Wave an exclusive license to develop and distribute products to the in-home consumer microcomputer market segment. Does this affect G2C (government-to-consumer) transactions of information?
I have to wonder what fraction of the federal dataprocessing contracts on which Ross Perot built EDS would qualify for Titan's retained market. Perhaps strictly internal jobs like payroll but not claims-adjudication or benefits-administration?
Best wishes,
John
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