Software Rights Archive, LLC v. Google Inc. et al

Filing 76

RESPONSE to Motion re 66 MOTION to Dismiss for Lack of Standing filed by Software Rights Archive, LLC. (Attachments: # 1 Exhibit Declaration of Lee Kaplan 1-12, # 2 Exhibit Declaration of Lee Kaplan 13-16, # 3 Exhibit Declaration of Lee Kaplan 17-24, # 4 Exhibit Declaration of Lee Kaplan 25-36)(Kaplan, Lee) (Additional attachment(s) added on 2/3/2009: # 5 Text of Proposed Order) (ehs, ).

EXHIBIT 25

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION
SKY TECHNOLOGIES LLC,
§ § § § § §
§ §

Plaintiff,
v.

§ CIVIL ACTION NO. 2:06-CV-440 (DF)

SAP AG, SAP AMERICA, INC. and ORACLE CORPORATION,

Defendants.

§

ORDER
Curently before the Cour is Defendants' Rule 12(b)(1) Motion to Dismiss forLackdf
Standing (Dkt. No. 132) and

related briefing (Dkt. Nos. 147,155,171, 186, 189). The Cour

held a hearing regarding this'

matter on Februar 28,2008. Dkt. No. 187. In a March 20,2008

Order (the "March Order"), the Court requested additional briefing on this matter. Dkt. No. 193 at 19. Thus, currently before the Court is Sky's supplemental brief (Dkt. No. 198) and related
briefing (Dkt. Nos. 200,204, and 206). After considering the arguments and the

briefing, the

Court DENIES Defendants' Rule 12(b)(1) Motion to Dismiss for Lack of

Standing (Dkt. No.

132).

I. BACKGROUND
A. Factual Background i
On October 17, 2006, Plaintiff Sky fied a claim for infringement of

U.S. Patent Nos.

6,141,653 (the '''653 Patent"), 6,336,105 (the "'105 Patent"), and 6,338,050 (the '''050

Patent").

i This background was taken from this Cour's previous March 20, 2008 Order,~Dkt. No.
193 at 1-4.
1

EXHIBIT

25

Complaint, Dkt. No. 1. Jeffrey Conklin ("Conklin"), David Foucher, and Daniel Foucher are the
named inventors of

these patents. United States Patent Nos. 7,162,458 (the "'458 Patent") and

7,149,724 (the '''724 Patent") were later added. Second Amended Complaint, Dkt. No. 44.
Conklin,

David Foucher, Daniel Foucher, and Wiliam 1. Flanagan are listed as the inventors of

these two patents.

The inventors of all the above five patents-in-suit assigned their rights to TradeAccess,
Inc. ("TradeAccess"). Dkt. No. 132 at 72 (citing Dkt. No. 132, Exhibits B-F); Dkt. No. 147
(citing Dkt. No. 132, Exhibits B-F). Each of

these assignments was fied in the United States

Patent & Trademark Offce ("USPTO"). Dkt. No. 132 at 8. TradeAccess was formed by
Conkin. Dkt. No. 132 at 8; Dkt. No. 147 at 2. On April

2, 2001, an Intellectual Propert

Security Agreement was made between TradeAccess and Silicon Valley Bank where a loan was

secured interests to TradeAccess's intellectual propert. Dkt. No. 132 at 8 (citing Dkt. No. 132,
Exh. G (the "SVB Agreement"); Dkt. No. 147 (citing Dkt. No. 132, Exh. G). The agreement contained a clause stating that the IPAgreement would be "governed by and construed in
accordance with the laws of the Commonwealth of

Massachusetts." SVB Agreement at 7. On

April 3, 2001, an Intellectual Property Security Agreement was made between TradeAccess and

Cross Atlantic Capital Parters, Inc. ("XACP"), as agent for Cross Atlantic Technology Fund,
L.P. ("XATF"), The Co-Investment 2000 Fund, L.P. ("CI 2000"), and 3i Technology Partners

L.P. ("3i"). Dkt No. 132 at 8; Dkt. No. 147 at 3; Dkt. No. 132, Exh. H (the "XACP
Agreement"). XATF, CI 2000 and 3i received first priority in TradeAccess's intellectual

propert, except as to liens and security interests granted to SVB. Dkt. No. 132, Exh. Hat 2.

2 All page numbers refer to the document header page numbers.

2

This second agreement also had a Massachusetts choice of law clause. XACP Agreement at 8.

These documents were filed with the USPTO. Dkt. No. 132 at 8.
TradeAccess changed its name to Ozro on May 3, 2001 by filing papers with the State of
Delaware Offce of

the Secretary of State. Dkt. No. 132 at 8 (citing Dkt. No. 132, Exh. L). On

December 5,2002, XATF and CI 2000 "entered into a Purchase Agreement with 3i, wherein 3i

assigned all rights in its agreements with Ozro, including the Intellectual Propert Security
Agreement. Dkt. No. 147 at 3. On December 18,2002, Silicon Valley Bank entered into a Non-

Recourse Assignment with XATF and CI 2000, as tenants in common with 2/3 undivided

interest to XATF and 1/3 undivided interest to CI 2000, wherein Silicon Valley Bank transferred

its rights to the secured loan agreement with Ozro. Dkt. No. 147 (citing Dkt. No. 132, Exh. Iat
1). Thus, at this point, the interest was consolidated to XA TF and CI 2000.

Under a Settlement Agreement, effective as of June 4, 2003, XACP, CI 2000, and XATF

sought to sell to Conkin "certain intellectual property and assets of Ozro, Inc. (flal Trade
Access, Inc.)." Dkt. No. 132 at 8; Dkt. No. 147 at 4; Dkt. No. 132, Exh. M. The Agreement

specified that the Intellectual Propert would be purchased by the new entity "Newco" created

by Conklin. Dkt. No. 132, Exh. Mat 7. The Agreement stated:
Public Auction. The XACP Entities (XACP, CI 2000, and XATFJ shall use their best efforts to obtain title to the Intellectual Propert for purposes of a transfer from the XACP Entities to Newco, by sellng all of the XACP Entities' rights in and to the Secured Intellectual Property by Public Auction within sixty (60) days
after the Effective Date. The XACP Entities shall provide Conklin with the

opportity to review and approve the terms and notices relating to the Public
Auction prior to their release. At the Public Auction, the XACP entities, or their

designee, wil credit bid up to $4,031,844, as may be required to purchase the Intellectual Propert, including but not limited to the right to sue for past infringement or misappropriation of the Patents, covered by security interests held by the XACP Entities. . . .

3

Dkt. No. 132, Exh. M at 7-8. The $4,031,844 was the "amount owed by Ozro to XACP." Dkt.
No. 132 at 8.

On July 14,2003, a public auction was held regarding the Ozro Intellectual Property.
According to the auctioneer:

The intellectual propert assets were offered for sale in two offerings. The first sale was to foreclose on the security interest originally held by Silicon Valley Bank that was subsequently assigned to Cross Atlantic. Cross Atlantic foreclosed on this first priority security interest as assignee of this interest. The second sale was to foreclose on the security interest originally held by Cross Atlantic. Cross Atlantic was the only bidder and it, through its representative Craig Vaughn, purchased the assets for $100,000.
Dkt. No. 132, Exh. N (letter from Atlantic Auctions to counsel for Ozro).

Therefore, XACP foreclosed on both of the security interests. Defendants state that

despite this sale, there was no written instrment assigning the Ozro patents to XACP. Dkt. No.
132 at 9. On July 23, 2003 a written assignment was made by XACP to Whitelight Technology,

LLC,a predecessor to Sky, for the rights to multiple patents, including the '653 Patent, the '050
Patent, the' 105 Patent, as well as, U.S. Application No. 09/702,128, which would later become
the '458 Patent, and

U.S. Application No. 09/702,062, which would later become the '724

Patent. Dkt. No. 132, Exh. 0 at 1. This assignment had a choice oflaw clause for the
assignment to be constred pursuant to the laws of the Commonwealth of

Pennsylvania. ¡d. at 3.

On November 1,2007, Ozro, Inc. submitted a Certificate of

Dissolution to the State of

Delaware,

which was authorized on April

24, 2007 by Conklin. Dkt. No. 132, Ex. P.

B. Procedural Background

Now before the Court, Defendants contest the assignment made on July 22, 2003 from XACP to Whitelight Technology, LLP as improper because Defendants aver that Ozro never

4

assigned the patents-in-suit to XACP in any instrument in writing after the July 14,2003

foreclosure. Sky argues that the security agreements and their subsequent recording in the USPTO served as assignments. Ozro has filed a motion to intervene (Dkt. No. 146) in order to
resolve the standing issue.

The primary disagreement between Sky and the Defendants was whether the April 2001

Security Agreements, which were recorded and later foreclosed, were suffcient to satisfy
Section 261. Defendants had argued that Ozro was obligated to transfer title, after the July 14,

2003 foreclosure, through a written assignment pursuant to Section 261. See Dkt. No. 132 at 9.

The Cour distinguished conflcting cases proffered by the parties. Sky relied on the Supreme
Court decision in Waterman v. Mackenzie for the proposition that the recording of a security
interest "operates as delivery of

title to satisfy § 261." Dkt. No. 147 at 5. Defendants relied on

In re Cybernetic for the proposition that security interests do not qualify as assignments under

Section 261." Dkt. No. 132 at 12. In the previous March Order, this Court held that the Ninth
Circuit in In re Cybernetic merely held that Section 261 only requires the recording of ownership interests in a patent and that Waterman does not broadly stand for the proposition that a security interest recorded with the USPTO effectively transfers title to the secured lender under Section

261. Dkt. No. 193 at 14-17.

The Cour requested fuher briefing, asking the parties to address: (1) the effect of any
evidence after the foreclosure; (2) whether the provisions of

the Security Agreement granted

substantial rights as to effect a transfer of

title; and (3) the effect of a security agreement that

contains provisions to transfer of

title but is not effective unless defaulted upon. Dkt. No. 193 at

18.

5

II. LEGAL PRINCIPLES
"The burden of demonstrating standing falls to (Plaintiff), as '(iJt is well established. . .
that before a federal court can consider the merits of a legal claim, the person seeking to invoke

the jurisdiction of the court must establish the requisite standing to sue.'" Ortho Pharm. Corp. v.
Genetics Inst., Inc., 52 F.3d 1026 (Fed. Cir. 1995) (quoting Whitmore v. Arkansas, 495 U.S. 149,

154 (1990); citing Sicom Sys., Ltd. v. Agilent Tech., Inc., 427 F.3d 971,975-76 (Fed. Cir. 2005)).

One seeking damages for infringement of a patent must hold legal title to that patent.
See, e.g., Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed. Cir. 1995); Speedplay, Inc. v.

Bebop, 211 F.3d 1245, 1249-50 (Fed. Cir. 2000) (citing 35 U.S.C. §§ 100(d), 261, 281). Under
Section 261 :

Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his the United application for patent, or patents, to the whole or any specified part of
States. . . .

An assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Offce within three months from its date or prior to the date of such subsequent purchase or mortgage.

A par without title has no standing to bring suit. Filmtec Corp. v. Alled-Signal Inc., 939 F.2d
1568 (Fed. Cir.1991); Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1131 (Fed. Cir. 1995)

("The right to sue for infringement is ordinarily an incident of legal title to the patent. ").

"Furher, all co-owners must, ordinarily, consent to join as plaintiffs in an infringement suit."
DDB Techs., LLC v. MLB Advanced Media, LP, 465 F. Supp. 2d 657,661 (W.D. Tex. 2006).

Legal title, which confers standing, must be held at the inception of the lawsuit. Paradise
Creations, 315 F.3d at 1308 (citing Lujan v. Defenders of

Wildlife, 504 U.S. 555,570 n.5, 119 L.

6

Ed. 2d 351, 112 S. Ct. 2130 (1992) (plurality opinion)); Gaia Technologies, 93 F.3d at 777.

"The party asserting that it has all substantial rights in the patent 'must produce. . . written
instruments documenting the transfer of

proprietary rights.''' Mentor HIS, Inc., 240 F.3d at 1017

(quoting Speedplay, 211 F.3d at 1250). Section 100(d) provides that a '''patentee' includes not

only the patentee to whom the patent was issued but also the successor in title to the patentee."

Therefore, the chain of title must be followed in order to determine the part holding legal title to
the patent. See Enzo, 134 F.3d at 1093; Gaia Technologies, 93 F.3d at 777.

"In examining a Rule 12(b)(1) motion, the Court is empowered to consider matters of

fact which may be in dispute." Id. A cour may not grant dismissal "unless it appears certain
that the plaintiffs cannot prove any set of facts in support of their claim which would entitle them
to relief," and a court "must take as true all of the allegations of

the complaint and the facts as set

out by the (plaintiffs)." Saraw Partnership v. Us., 67 F.3d 567,569 (5th Cir. 1995).
III. MOTION TO DISMISS
Sky has offered several theories in defense against the motion to dismiss. Sky initially
argued that a security interest that is recorded in the PTO effects transfer of

title. Dkt. No. 147 at

1. Sky stated that the Agreements transferred a title and the rights were slowly consolidated

through various assignment agreements. Id. at 3. However, as explained above, the Cour
rejected this argument, stating that the Waterman case cited by Sky related to a dispute regarding

a subsequent purchase or mortgagee. March Order at 17.
Sky now argues that transfer of title to the patents does not require a written assignment.

Dkt. No. 204 at 1. Moreover, Sky states that if a written assignment was required, the Security
Agreements are written assignments that are actually conditional assignments that become
7

effective upon default. Dkt. No. 198 at 3. Therefore, Sky argues that the transfer of

title

occurred at the foreclosure. Id. at 5.
The first issue the Cour addresses is whether a transfer may be effected through an
operation of law.
A. Transfer by Operation of Law and Choice of Law

1. Parties' Positions

Defendants cite to a recently issued Federal Circuit authority, Akazawa v. New Link
Technology International, Inc., 520 F.3d 1354 (Fed. Cir. 2008), argung that the Federal Circuit

affrmed the "requirement that transfer by assignment under § 261 'be in writing'." Dkt. No. 200
at 14 n.46. Defendants state that the question of automatic assignment is a matter of federal and
not state law. Dkt. No. 200 at 14 (citingDDB Techs. L.L.c. v. MLB Advanced

Media, L.P., 517

F.3d 1284, 1290 (Fed. Cir. 2008)). Defendants further argue that a debtor must "convey written

title or written tite must be ordered conveyed by a duly-authorized court." Id. at 14 (citing Ager
v. Murray, 105 U.S. 126, 131 (1881)).

Sky argues that new Federal Circuit authority, Akazawa, provides that title to patents can

pass by operation oflaw and no written assignment under § 261 is necessary. Dkt. No. 204 at 1
(citing Akazawa, 520 F.3d at 1356-57). Sky contends that Defendants argue that federal

law

applies in order to advance Ager. Dkt. No. 204 at 4. Sky believes that Ager is inapplicable and
distinguishable because Ager was decided before the creation and adoption of the Uniform

Commercial Code ("UCC"). Id. at 4-5.
Defendants reply that Section 261 requires that assignments be in writing. Dkt. No. 206

8

at 8. Defendants contend that courts have long recognized that state probate law automatically

vests legal title in a patentee's heirs and interprets the holding in Akazawa to be limited to

extending those decisions to allow the probate law of another nation to similarly vest legal title

in an heir without a written assignment. Id. at 8 (citing Akazawa, 520 F.3d at 1357-58; HM
Stickle v. Heublein, Inc., 716 F.2d 1550, 1558 (Fed. Cir. 1983); Winkler v Studebaker Bros. Mfg.

Co., 105 F. 190, 190-91 (C.C.S.D.N.Y. 1900)). Defendants clarify that they do "not contend, as
Sky represents, 'that the only means by which title to patents transfers is an assignment in

writing or cour Order compelling assignment''' rather that "where-as here following XACP's
purported foreclosure on Ozro's patents-no state law operates to vest legal title to the patents, a
plaintiff must obtain a written assignment pursuant to Section 261 in order to establish its legal title and therefore standing to pursue any claim for patent infringement." Id. at 8-9.
2. Analysis Defendants and Sky fundamentally agree on the general holding of Akazawa that "there

is nothing that limits assignment as the only means for transferring patent ownership. Indeed,

the case law ilustrates that ownership ofa patent may be changed by operation oflaw."
Akazawa, 520 F.3d at 1356. The primary difference between Defendants and Sky's argument is
that Defendants presume that there is no state law that operates to vest legal title to the patents and Defendants conclude that legal title must therefore be established through a written

assignment pursuant to Section 261 or a Court order. see Dkt. No. 206 at 9.
In Akazawa, the defendant challenged the standing of the plaintiff. The inventor of the
patent in interest, U.S. Patent No. 5,615,761 ("the '716 patent"), had died intestate, and the heirs, the inventors' wife and two daughters, consolidated their rights to a single daughter through an
9

"Inheritance Agreement," and the daughter in tum assigned the rights under the patent to the

plaintiff. Akazawa, 520 F.3d at 1355. The defendant argued that Section 261 "mandates a
writing where there is a transfer upon death in order for there to be a proper assignment between
two entities." Id. Like in this case, the defendant stated that the plaintiff did not own the patent

because "there was never a writing transferring the '716 patent from the estate of (the inventorJ
to (the inventors' heirsJ, the inheritance agreement between (the inventors' heirsJ and the

assignment between (the daughterJ and (the plaintiff) notwithstanding." Id. \rhe.EederaL.Cir:£

filaJñã"oJYer.mpJ)l.a_p.a,t.eiit.y. bCe~dJiY,.meration.of.aw.:..d. at l3-5!r
t;iK"ew,if'e,.the..CQ,urt,determines.that.ownership.ofApaten.!Y be changed by_op.erati;)

õJJãW and thus, the Court must determine whether the Security Agreement and subsequent
foreclosure transferred the patent by operation of law.

Defendants argue that federal

law, not state law, applies in automatic assignments, and
law, as posited by Ager, requires a

argue that because there was no written assignment, federal

Court order. See Dkt. No. 200 at 14. Defendants rely on DDB Technologies for the proposition

that federal law would apply in this case. Id. In DDB Technologies, the defendant had obtained a
license to the patents-in-suit from the former employer of one of the inventors, who helped to

form the plaintiff company. DDB Technologies, 517 F.3d at 1288. The district court had to
evaluate whether, under the employment agreement between the former employer and the
employee/inventor, there was an automatic assignment of

the inventor's rights. Id. The Federal

Circuit first determined that "(aJlthough state law governs the interpretation of contracts
generally, the question of

whether a patent assignment clause creates an automatic assignment or

merely an obligation to assign is intimately bound up with the question of standing in patent
10

cases" and concluded that this was a matter of

federal

law. Id. at 1289-90.

On the other hand, Judge Newman's dissent stated that the panel majority was

overreaching and contrary to law and precedent and Judge Newman narrowly stated the

majority's holding as relating to "interpretation of employment contracts, including clauses

establishing employer-employee obligations with respect to inventions and patents." Id. at 1296. Here, there is not an employment contract, but rather a security agreement. As explained above,
the Akazawa case addressed the analogous question of whether there was a break in the chain of
title due to the lack of written assignment pursuant to Section 261. In

Akazawa, the Federal
law, tyically governs patent

Circuit held that the "case law is clear that state law, not federal

ownership." Akazawa, 520 F.3d at 1357 (citing Jim Arnold Corp. v. Hydrotech Sys., Inc., 109
FJd 1567, 1572 (Fed. Cir. 1997). The Federal Circuit determned that resolution of

the issues

required an interpretation of Japanese intestacy law. Id. at 1358.
The Cour determnes that state. law, not federal

law, should govern this case. Here, both

Security Agreements stated that Massachusetts choice of law would apply. SVB Agreement at

7; XACP Agreement at 8. Therefore, the Court applies Massachusetts law, specifically the

Massachusetts UCC (i.e. Mass. An. Laws ch. 106 Ar. 9), to determne whether there was a
transfer of title by operation of

law.

B. Transfer of Title
1. Parties' Positions

Sky argues that "numerous courts have observed the passing of title to intellectual

propert upon a debtor's default." Dkt. No. 198 at 4 (citingHaymaker Sports, Inc. v. Turian,

11

581 F.2d 257,261 (C.C.P.A. 1978); Health Discovery Corp. v. Ciphergen Biosystems, Inc., No.
2:06-cv-260, 2007 WL 128283, at *1 (E.D. Tex. Jan. 11,2007); digiGan, Inc. v. iValidate, Inc.,

No. 02 Civ. 420, 2004 WL 203010, at *3 (S.D.N.Y. Feb. 3,2004)). Sky contends that "full title
to the patents-in-suit passed to XACP when Ozro defaulted and XACP foreclosed." Id. at 5.
Sky states that both Security Agreements provide that the lenders had all "rights and remedies of

a secured creditor under the Massachusetts Uniform Commercial Code." Id. at 6 (citing SVB

Agreement at 6; XACP Agreement at 6-7). Sky avers that under Massachusetts UÇC a default
transfers all of

the debtor's rights in the collateral, including the rights to sell, lease, license, or
the propert. Id. (citing MASS. GEN. LAWS ch. 106 at §§ 9-617 & 9-610). Sky

dispose of

emphasizes that under Massachusetts law, "a secured creditor is not required to bring an action

to compel assignment to foreclose on intellectual propert interests or execute any additional

instrment upon foreclosure," citing that Massachusetts UCC does not contain a provision
requiring additional action after foreclosure on intellectual propert. Id. at 9 (citing MAss. GEN.
LAWS ch. 106 at Ar. 9). Sky argues that the Security Agreements were conditional assignments

that were duly recorded with the PTO, thus fulfilling Section 261. Id. at 7.

Defendants respond that the security interests are not "conditional assignments." Dkt. No. 200 at 6. Defendants reiterate that an assignment must transfer all substantial rights while a
security interest is an agreement for a future assignment and not a "present ownership right in the

patent." Id. at 8-9 (citing Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336, 1341 (Fed.
Cir. 2006); Trimarchi v. Together Dev. Corp., 255 B.R. 606, 611 (D. Mass. 2000); quoting City

Bank and Trust Co. v. Otto Fabric, Inc., 83 B.R. 780, 782 (D.Kan. 1988)). Defendants note that
the language of

the contract does not provide for an automatic assignment, but rather, the grant

12

clause and other provisions repeatedly provides for a security interest. Id. at 10-12 (citing SVB
Agreement'r'r 1, 3(c), 3(1), 3(k), 6(a), 8; XACP Agreement'r'r 1, 3(c), 3(h), 3(1), 3(k), 6(a); DDB
Tech., 517 F.3d at 1290).

Defendants state that a security interest does not convey title and is not an assignment.

Dkt. No. 200 at 11-12 (citing Holt v. United States, 13 U.C.c. Rep. Servs. 336, 1973 WL 614, at

*1 (D.D.C. 1973)). Defendants note that the article that Sky relies upon for its assignment

theory recognizes a security interest to be a "lesser interest in the collateraL" Id. (citing Thomas
L. Bahrick, Security Interests in Intellectual Property, 15 AJ.P.L.A. Q.J. 30,40 (1987)).

Defendants further provide that the default did not transfer substantial rights. Dkt. No.
200 at 14. Defendants argue that federal

law should apply and that "(eJven where the language

in the underlying loan documents provides the creditor' an entitlement to an immediate assignment of all right, title, and interests to the patents, with the right and power to execute and
record an assigìlent of the patents as attorney-in-fact on behalf of

the debtor after notice of
the patents occured.''' Id. at 15 (quoting

default,' courts have held that 'no actual

assignment of

In re Tower Tech, Inc., 67 Fed. Appx. 521, 524 (10th Cir. 2003)).
Defendants alternatively argue that even if

Massachusetts law applied, the cours are
the creditor.'" Dkt.

"clear that 'an event of default does not automatically transfer possession to

No. 200 at 15 (quoting McDonald v. Rockland Trust Co., 798 N.E.2d 323, 327 (Mass. App.
2003)). Defendants cite that Massachusetts states that after foreclosure, if

the debtor refuses to

sign a written transfer of

title, the creditor may fie a "transfer statement." Id. at 15-16

(M.G.L.A. 106 § 9-619 Comment 2). Defendants assert that a creditor may alternatively seek a
court order compelling a written assignment or appointing a receiver to issue a written
13

assignment, which Ozro failed to do in its transfer to XACP. Id. at 16 (citing Barton v. White,

144 Mass. 281, 284 (Mass. 1887); Wilson v. Martin-Wilson Automatic Fire-Alarm Co., 151

Mass. 515 (Mass. 1890); McCann v. Randall, 147 Mass. 81 (Mass. 1888)).

Sky responds that the McDonald case cited by Defendants is correct in stating that "an
event of default does not automatically transfer possession to the creditor, (butJ McDonald does

not stand for the broader principle that title cannot pass by operation oflaw." Dkt. No. 204 at 5.
Sky states that a creditor has several options, including forbearing the enforcement of its security

agreement, and in this situation "XACP elected to foreclose and purchase the patents." Id. Sky
contends that, contrary to Defendants' assertion, § 9-619 does not require that XACP execute a

"transfer statement," which is a non-mandatory statement that is used "to address procedural

problems that can arise when a secured part effects a non-volitional transfer, and the 'transfer
statement' assists the secured part in recording its interest." Id. at 6 (citing MASS. GEN. LAWS

ch. 106 § 9-619 Author's Note).

Defendants counter that "unless state law specifically vests legal title to a patent, a
written

assignment is required to vest legal title." Dkt. No. 206 at 9 (citing Ager v. Murray, 105

U.S. 126, 131 (1881)). Defendants contend that Massachusetts law does not operate to vest legal

title to patents following a default. Id. at 10. Defendants argue that in In re Roman Cleanser
Co., 43 B.R. 940, 948 n.4 (Bank. Mich. 1984), aftd 802 F.2d 207 (6th Cir. 1986), the court held
that a security interest in a trademark was not an assignment upon default, and even after a

creditor enforces the security interest, the creditor was stil required to comply with the written

assignment provision of the Lanham Act. Id. at 10 n.17. Otherwise, Defendants assert a cour of
equity could appoint a trustee to make the assignment, and in this situation Defendants argue that
14

XACP could have executed a written assignment to itself as it was Ozro's "attorney in fact." Id.
at 10 (citing Wilson v. Martin-Wilson Automatic Fire-Alarm Co., 151 Mass. 515,516-17,519-20

(Mass. 1890); XACP Agreement at 6).

Defendants distinguish the probate cases cited in Akazawa and argue that unlike those

cases, Massachusetts UCC § 9-610 "does not provide that legal title to a patent 'shall vest

immediately' or 'vests by operation of law' in a creditor upon default or foreclosure." Dkt. No. 206 at 11 (citing HM. Stickle, 716 F.2d at 1558; Winkler, 105 F. at 190-91). Defendants
reiterate that the Tenth Circuit in In re Tower Tech rejected an automatic transfer of

title. Id.

Regarding the "transfer statement," Defendants aver that it is not required but is one mechanism
to obtain title after default without a court order; however, Defendants note that this mechanism

would not be needed if title to the patent vested automatically as Sky claims. Id. at 11-12 (citing

Thomas M. Ward, Intellectual Property in Commerce § 3:70 (2007)). Defendants state that the
cases cited by Sky support Defendants' position that an affrmative act had to be made after
foreclosure. Id. at 12 (citing Health Discovery, 2007 WL 128283, at *1; digiGan, 2005 WL
2254464, at *3).

2. Analysis
From the briefing, the Defendants and Sky appear to agree on two preliminary issues of

law. Defendants have conceded that a patent may pass by operation oflaw and a written
assignment is not the only method to transfer a patent. Defendants' Sur-Reply, Dkt. No. 206 at
8. Likewise, Sky has conceded that a default of a security interest

does not automatically

transfer possession to the creditor. Sky's Reply, Dkt. No. 204 at 5 (citing McDonald, 798
N.E.2d at 327 (stating "an event of default does not automatically transfer possession to the
15

creditor")). Defendants assert that there is no state law that automatically vests legal title upon
foreclosure, whereas Sky argues that it is the foreclosure and purchase of the patents that

effected the transfer. See Dkt. No. 206 at 9; Dkt. No. 204 at 5. Therefore, the point of
contention between the parties, and the issue that the Court must resolve, is whether there was a
transfer of the patents from Ozro to XACP through an operation of

law, specifically whether a

foreclosure sale and purchase, under Massachusetts UCC, is suffcient to transfer title by
operation of

law.

The Security Agreements provide the following remedies upon a default:
8. Remedies. Upon the occurrence and continuance of an Event of

Default, Lender shall have the right to exercise all the remedies of a secured part under the Massachusetts Uniform Commercial Code, including without limitation the right to require Grantor to assemble the Intellectual Property Collateral and any tangible propert in which Lender has a security interest and to make it available to Lender at a place reasonably designated by Lender. . . .
SVB Agreement at 6.
8. Remedies. (a) Upon the occurrence and continuance of an Event

of

Default, Agent shall have the right to exercise all the remedies of a secured par

upon such default under the Massachusetts Uniform Commercial Code (the "UCC") (or other applicable Federal or other law), in addition to which, Agent shall have the following rights and remedies: (I) to take possession of all or any portion of the Intellectual Propert Collateral, (ii) to sell, lease, or otherwise the Intellectual Property Collateral, in its then condition or dispose of any or all of following such preparation or processing as the Agent deems advisable and with or without the taking of possession of any of the Intellectual Propert Collateral, the rights, remedies, powers, privileges, and and (iii) to exercise all or any of
discretions under all or any of

the documents relating to the Secured Obligations.

XACP Agreement at 6-7.
Sky argues that the mere foreclosure results in the transfer of

title. Defendants rely

16

significantly on In re Tower Tech, an unpublished Tenth Circuit opinion that found that a notice

of default did not provide for an actual assignment of secured patents, even though the

promissory note contained the provision that, in the event of default, the lender "shall receive an
immediate assignment of all right, title and interest to the patents specified as collateraL."3 In re

Tower Tech., 67 Fed. Appx. at 523-24. The Cour notes that unlike the foreclosure sale that
occured here, in Tower Tech, the debtor only gave a notice of default and acted no fuher. In re

Tower Tech., 67 Fed. Appx. at 524. Defendants cite to the treatise Intellectual Propert in
Commerce for the proposition that there is a need for a "post-default document that reflects
transfer of ownership out of

the debtor." Dkt. No. 206 at 11 (citing Thomas 1. Ward, Intellectual

Property in Commerce § 3:70). Specifically the treatise stated:

Because the federal forms of intellectual propert are subject to a system of "title"
registration or recording, it is important for the secure par to be able to have a

recordable post-default document that reflects transfer of ownership out of the debtor. The record transferee might be the foreclosure sale buyer, assignee or
exclusive licensee. The record transferee might also be the secured part, either
permanently, in the case of a strict foreclosure, or temporarily,

in anticipation of disposition to a subsequent part. The security agreement can be supplemented by the attachment of such a recordable ownership document along with the debtor's power of attorney authorizing the secured part's nominee to complete and execute the form on default. If such a document is not provided for in advance, and the debtor is not willng to cooperate after default, the secure part can go to cour to either force the debtor to execute the necessary papers or to obtain a recordable document prepared by the court itself.

Thomas J. Ward, Intellectual Property in Commerce § 3:70
In support of this proposition, the treatise cites to Tower Tech, stating:

3 This is consistent with the Federal Circuit case cited by Defendants, IpVenture, Inc. v.

Prostar Computer, Inc., 503 F.3d 1324, 1327 (Fed. Cir. 2007), holding that an agreement stating
"agree to assign" was a futue assignment, not a present assignment.

17

Although the court in Tower Tech does not expressly say that the lender could have taken good title to the patent collateral on default without following the provisions for either "acceptance of collateral" or "disposition" in Article Nine, it seems to suggest as much. While a secure party should be entitled to execute the necessary post-default transfer documents under a proper power-of-attorney, these documents must be executed in furtherance of an otherwise reasonable the collateral (U.C.c. (RevisedJ §§ 9-610 to 9-617) or a properly disposition of proposed "acceptance in satisfaction" (U.C.C. (RevisedJ §§ 9-620 to 9-621).

Thomas J. Ward, Intellectual Property in Commerce § 3 :70 n.!.

Taking these two sections together, the Court first notes that the treatise presumes a need
for a "post-default document that reflects transfer of ownership," presumably out of

the writing

assignment requirements of

the various intellectual propert acts. See 35 U.S.C. § 261 (patent);

15 U.S.C. § 1060 (trademark); 17 U.S.C. § 204 (copyright).~How~, as alredy-.xpJain.c
ãbove, theFedërã:iCireuïrhëiai¥Kazawa_tha~La-'ritiJlgispt,req)Jired to tra,nsfer ti tle,~.J

(gtle may_p~UP'eratiõñf law. Akazawa, 520 F.3AaU3à6)This finding is also consistent
with Tower Tech and other Michigan cases finding that a mere default or notice of default was

insuffcient to transfer title. The treatise suggests that a subsequent action was required, either
through a disposition under UCC § 9-610 or an acceptance in satisfaction under UCC § 9-620,

dealing with a strict foreclosure. Alternatively, a court order or a transfer statement pursuant to
UCC § 9-619 would be acceptable.

Massachusetts Annotated Laws ch. 106 § 9-610(a) provides: "After default, a secured

party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present

condition or following any commercially reasonable preparation or processing." Massachusetts
Annotated Laws ch. 106 § 9-61O(c) provides: "A secured part may purchase collateral: (1) at a

public disposition; or (2) at a private disposition only if the collateral is of a kind that is
customarily sold on a recognized market or the subject of

widely distributed standard price
18

quotations." Further, as explained in Massachusetts Annotated Laws ch. 106 § 9-617(a) a
"secured party's disposition of collateral after default: (1) transfers to a transferee for value all of
the debtor's rights in the collateral," and comment 2 states "Title Taken by Good-Faith
Transferee. Subsection(a) sets forth the rights acquired by persons who qualify under subsection

(b) - transferees who act in good faith. Such a person is a 'transferee,' inasmuch as a buyer at a
foreclosure sale does not meet the definition of 'purchaser' in Section 1-201 . . . ."

Here, the patents were placed at a "public" auction. XACP foreclosed on both of the
security interests and Ozro was later notified of

the sale. See Dkt. No. 132, Exh. N. Thus, unlike

the debtor in Tower Tech, XACP acted beyond merely noticing the default and actively

foreclosed on the property, pursuant to §§ 9-610 and 9-617. Therefore, the point at which title
transferred was on the date of

the foreclosure, July 14,2003. The transfer to Whitelight

Technologies, predecessor to Sky, occurred on July 22, 2003. Dkt. No. 132, Exh.O. Thus, the
chain-of-title was not broken and Sky has proper title to the patents-in-suit. Moreover,
Defendants had previously stated that Ozro had executed Terminal Disclaimers on June 4 and 5,

2001 and June 3, 2003 as well as a license on November 19,2001. See Dkt. No. 198 at 8.
However, the transfer of

title on July 22,2003 is consistent with Ozro's actions prior to this time,

as it held title while the other entities merely held a security interest.

III. CONCLUSION
t'F or~the.foregoing.reason~, tli'frCöurt-D ENIES-Dëféñdants;..Rule.12(b )E-l-)-Motion.to'
p.miss_for-Lack-of.Standing~(Dkt. No. iJiD

Accordingly, the Court DISMISSES Ozro's Motion to Intervene (Dkt. No. 146) as

MOOT.

19

It is so ORDERED.

SIGNED this 4th day of June, 2008.

DAVID FOLSOM UNITED STATES DISTRICT JUDGE

~sà~

..

20

EXHIBIT 26

.10: FORM

Case 2:07-cv-00511-TJW-CE

Document 66-11

Filed 07/16/2008

Page 1 of 18

7 (Rev. 1214)

FORM 7. STATEMENT OF FINANCIAL AFFAIRS

NORTHERN DISTRICT,~~!tk~~~RNIA .
InRe: SITE TECHNOLOGIES,
(Name)
INC. ""+"'~;..,,v Case

UNITED STATES BANKRUPTCY COURT

No. 99-50736-irgcz
CI

Debtor FEB 1 8 ZOty;

know)

STATEMENT èi~~bfA~~~S
This statement is to be completed by every debtor. Spouses filin!r~'ÌØ'iht petition may file a single statement on which
the information for both spouses Is combined. .If the case is filed under chapter 12 or chapter 13, a married debtor must furnish

:~':.':;j~~~6~~~;;d,:":.::~~ ,

. information for both spouses whether or not a joint petition is flied. unless the spouses are separated and a jOint petition is not filed. An individual debtor engaged in business as a sole proprietor, partner, family farmer, or self-employed profeSSional, should provide the Information requested on this statement concerning all such activities as well as the individual's personal affairs.

Questions 1- 15 are to be completed by all debtors. Debtors that are or have been in business, as defined below, also box labeled "None.. If additional space Is needed for the answer to any question, use and attach a separate sheet properly Identified
must complete Questions 16 - 21. If the answer to any question Is .None." or the question Is not applicable. marK the'

with the case name, case number (if known), and the number of the question.

DEFINITIONS
"In business,Oo, A debtor is "in business. for the purpose of this form if the debtor Is a corporation or partnership. An
individual debtor ,is .in business. for the purpose of this form if the debtor is or has been, within the two years immedIately

preceding the filing of, thiS bankruptcy case, any of the following: an Offcer. director. managing executive, or person in control
of a corporation; a partner, other than a limited partner. of a partnership; a sole proprietor or self-employed.

"Insider." The term .inslder" includes but is not limited to: relatives of the debtor; general partners of the debtor and their
relatives; corporatioÌls of which the debtor Is an officer. director, or a person in control; offcers, directors. and any person in control

of a corporatede~tor and their relatives; affiliates of the debtor and insiders of such affilates; any managlngagent of the debtor.
11 U.S.C. § 101(30). .

1. Income from employment or operation of business

None State the gross amount of Income the debtor has received from employment, trade, or profeSSion, or from operation

D of the debtor's business from the beginning of this calendar year to the date this case was commenced. State also the gross
amounts received during the two years immediately preceding this calendar year. (A debtor that maintains, or has 'maintained,
financial records on the basis of a fiscal rather than a calendar year may report fiscal year Income. Identify the beginning.

If a joint petition Is filed, state Income for each spouse separately. (Married debtors tiling under chapter 12 or Chapter 13 must state income of both spouses whether arnot a joint petition Is flied,
and ending dates of the debtor's fiscal year.)

unless the spouses are separated and a joint petition is not flied.)
AMOUNT

SOURCE (if more than one)

1999 1998 1997

$1,827,000

$305,747

-0-

t '\

ORIGll~AL
EXHIBIT

26

Case 2:07 -cv-00511- T JW-'CE
10. Other transfers

Document 66-11

Filed 07/16/2008

Page 5 of 18

None a. List all other property, other than property transferred in the ordinary course of business or
o financial affairs of the debtor, transferred either absolutely or as security within one year Immediately preceding the commencement of this case. (Married debtors filing under chapter 12 or chapter 13 must

Include transfers by either or both spouses whether or not a joint petition is filed, unless the spouses are
separated and a joint petition is not filed,)

NAME AND ADDRESS OF TRANSFEREE, RELATIONSHIP TO DEBTOR

DESCRIBE PROPERlY TRANSFERRED.
DATE

AND VALUE RECEIVED

Savoir Technology Group, Inc. 254 Hacienda Avenue Campbell, CA 95008

12/28/98 $150,000 1/29/99 $ 50,000

Security interest in all assets

'5aniel Eggër~
Durham, NC 27705

2027 W. Club Bivdl

(.L98

$Jl,OOO

V-Search Technology 7

11. Closed financial accounts

None list all financial accounts and instruments held In the name of the debtor or for the benefit of the
or other instruments; shares and share accounts held In banks, credit unions, pension funds, cooperatives, associations, brokerage houses and other financial institutions. (Married debtors filing under chapter 12
or chapter 13 must include information concerning accounts or Instruments held by or for either or both

o debtor which were closed, sold, or otherwise transferred within one. year Immediately preceding the commencement of this case. Include checking, savings, or other financial accounts, certificates of deposit,

spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition Is
not filed.)
lYPE AND NUMBER
NAME AND ÂDDRESS OF INSTITUTION
AMOUNT DATE OR OF

AND

OF ACCOUNT AND
AMOUNT OF FINAL BALANCE

SALE

CLOSING

See Attached

12. Safe deposit boxes

None List each safe deposit or other box or depository in which the debtor has or had securities, cash, or
IZ other valuables within one year immediately preceding the commencement of thiS case. (Married

debtors filing under chapter 12 or chapter 13 must include boxes or depositories of either or both
petition Is not filed.)

spouses whether or not a joint petition is filed, unless the spouses are separated and a joint
NAE AND ADDRESS OF OR BANK OTHER DEPOSITORY
NAMES AND ADDRESSES OF THOSE WITH ACCESS

DESCRIPTION

TO THE BOX OR DEPOSITORY

OF CONTNTS

DATE OR TRASFER OR SURRENDER,
IF

ANY

) I(Insofar as Savoir's first financing statement was fied approximately 28 days after disbursing funds, Savoir's lien
with respect to its initial advance is in bona fide dispute if

the Debtor was insolvent in Januar 1999.)

EXHIBIT 27

2 STEPHEN T. O'NEILL (115132)

1 CRAG M. PRIM (0'17820) JANCE M. MORRY (099996)

MUY & MURRY
[phone]

3 A ProfessionalCorporatîon

3030 Hansen Way, Suite 200
4 Palo Alto, CA 94304.1009

F,' t:,~
APq \; ., ~.i~::;.. i ~ ~ ?....~..
. KfEt-iA:\¡ (:.ì . . '. .

Jt ~;J ~:.~; N!Z;.'i

UnitedSta'"c~':;~~~.' ": ;':;i'~Rk
3,~n ,;;;.:,~;'~.~~:;~:~~::;;~ ~;q¡r'

UNITED STATES BANKRUPTCY

COURT

NORTHRN DISTRCT OF CALIFORNA
SAN JOSE DIVISION

Case No. 99-50736-JRG-l1
Chapter 11

~ '"
on

N

~)o .Jl.. ° i: ~

. ~e .i:gØ\~ 0
".' 0"5 P

'oÕ n

..

Debtor.

~."'''ci~ :: ft~ ~ tJ ~
S¿j ti:~ ~
).~ 0 ii ..~::

it-. ~.'! °0e~ 0: "V

)

~ø;S(~~~ -'.cgø.$~ !Z1o 18

:Ji:ì~~i:

1i :!JN~

DEBTOR'S FffST AMENDED

PLAN OF REORGANIATION
Dated April 25; 2000

¡ 19
20
21

22
23

24
25

26
27 28
JM:slb-08

, DEBTOR'SPLANOFREORGANnON
In.R;oigpl. i.wp

I:\DAI

t\f',_,.) fP, ~r, J r~ F r.. ., ' '""II : \ \ ~;'. )j ¡~.:-'

~,.~U

EXHIBIT B
EXHIBIT

27

1

ths Plan. All propert of Debtor subject to the terms and conditions of

the Debtor, except as

2
3

otherwise provided in this Plan, shall be free and clear of any liens, encumbrances, Clais of
Creditors and Interests of Equity Security Holders.

4,
5

~l£l:3-Discharge._Due..o tliliguiôatiig-nature-öf th"isPlan.anetpurspanU9J

-.

~.mp.tty,:odë1T4l (g).ci);-jheehgy of tle £onfiritiõi..çlërsliaii.not.a~t.aa a..ajscfiarge_of 6 ~-debt.of t!:~-Detiö£:'aearos~p'riõftõCõimn..~!1, ex.seIJno-the-exte~that-such-debt~is.~.ai.1
7
8

\ûëfthePlãi ..
15. ,CHAPTER 11 POST .CONFIRMTION REPORTS AND FINAL DECREE
the
15.1 Post~Confirmation Reports. Not later than 90 days afer entr of Confiration Order, the Debtor shall fie a post-Confrmation status report the purpose of

9
10
11
..
¡i 0;

which

is to explain the progress made toward sU,bstantial consummation of the confired Plan. The
report shall include a statement of receipts and disbursements, with the ending cash balance, for

12
13

~.2g"Oel°'! -14 i: C' ~" ~
~.s2~ il ~ ... ~

.. se e
'"

.". '

the entire 90 day period. The repoi: shall also include information suffciently comprehensive to
enable the Court to determine (1) whether the Confirmation Order has become final; (2) whether

~d ~:~ ti &""~doe ~l0-;.. o(i ~ ... ., .g:0 l et
II ,,~.. Ei

e-~ ~ tJ ~

15
116

deposits, if any, required by the Plan have been distrbuted; (3) whether any propert proposed by
the Plan to be transferred has been transferred; (4) whether the Debtor under the Plan has
assumed the business or the management of the propert dealt with by the 'Plan; (5) whether the

~æc: c ~£g~~~i:: 17
c: g eie:S
!21'

18

payments under the Plan have commenced; (6) whether accrued fees due to the U.S. Trustee
under 28 U.S.c. § 1930(a)(6) have been paid; and (7) whether all motions, contested matters and
adversar proceedings have been finally resolved. Furter report must be filed every 90 days

~. c
ei

19

tl

20
21

thereafer until entry of a final decree, unless otherwise ordered by the Court.

22
23

15.2 Service of Reports. A copy of each report shall be served, no later than the day
upon which it is filed with the Court, upon the U.S. Trustee and such other persons or entities as

24
25

may request such reports in wrting by special notice fied with the Court.

15.3 Final Decree. Afer the Bankrptcy Estate is fully administered, the Debtor
shall file an application for a final decree, and shall serve the application on the U.S. Trustee,

26 27 28

together with a proposed final decree. The U.S. Trustee shall have twenty (20) days with
which to object or otherwise comment upon the Court's entr of the final decree.
,::i¡".0PEBTOR'S PLAN OF REORGANTION
_ .~.. T

JMslb-8 "û~ 't

I:'DAl Y'' lan-reorg.pl- 1. wpd

-20-

EXHIBIT 28

WRITTEN CONSENT OF

THE SOLE STOCKHOLDER OF
Site/tecbnologies/inc.
July 11, 1997
Pursuat to Section 228 of the Delaware General Corporation Law and the Bylaws of

Sìte/technologies/inc. ( the "Company"). the undersigned, being the sole stockholder of the
Company, hereby consents to the adoption of

the following resolutions by Written Consent without a

meeting.
Removal and Appointment of Directors

e;ffce, effective immediately, and the following individuals are elected to serve as directors of

the current airectors ofTfie Company are hëFëy rèinovccrfrom' the ICompany:_J,effr~y. Aìt,19Marengi,.P.atrick Grady",joli Humer..Qon Witmer, Step'hen MendeL.
C:RESOLVED: That all of

The undersigned hereby directs that ths Written Consent, which may be executed in
counterpars, be fied with the minutes of the proceedings of the stockholders of the Company. This Written Consent is effective as of July i i. i 997.

Deltaoim, Inc.

::ODMA\lCDOS\SQL2\J99618\1

EXHIBIT

28

EXHIBIT 29

ig uu.:

ACTION BY WRITTEN CONSENT OF THE SOLE DIRCTOR AND STOCk'HOLDER
OF

,,

SITE TECH NOLOGlES, INC.
DECEi\ CBER 21, 2000

In accordance with the California Coiiiorations Code and the Bylaws of Site Technologies,
J))c., a California corporation (the "CorI1pal1)'''), the undersigned, being the sole stockholder and

member of the Board of Directors of the Coiiipauy, hereby takes the following actions and adopts
(he toll owing resolutions by written consent without a meeting, effective for all puroses as of

the

date set fort above.
(lergerof site/tech nologies/inc. into the Conîj:inv!

RESOLVED, that Site Tccliologies, Ii1C. (the "Company"), the sole stockhoJëiër, director and parent corporation of site/technologies/inc. merge, and_Iief.e)): does inerge~into.its.e1f.site/tewologies/inc.,.and assumes..all its oblig~/
,RESOLVED FUTHER, that the merger shall be effectivé upon the date offiling of the Certificate of Ownership and M,;rgcr atthed hereto as Exhibit A with the Secretary of State of Delaware, and the Certifcate of Ovmership and Offcer's

Certificate, attached hereto as Exhliit B and Exhibit C respectively, with the
Secretary of State of CaliforIa; and
the Company be and is RESOL VED FURTHER, that the sol.;: offcer and director of hereby directed to make, execute and Lte in the name of an on behalf of the Company

said Certficate of Ownership and M\:rger in the State of Delaware setting forth a
copy of the resolutions to merge site'technologies/inc. to asswne its liabilties and

obligations, and the date of adoption i hereof, and to cause the same to be fied with the applicable SecretaI) of State and to do all acts and things whatsoever, whether
witlun or without the State of Delawar,~! which may be in anyway necessar or proper

to effect such merger.
RESOLVED FURTHER, that the sole offcer and director of hereby directed to make, execute and 1ile in the name of an on behalf of

the Company be and is
the Company

said Ceniñcate of Ownership and Offcer's Certificate in the State of Califorra
settg forth a copy of t1-e resolution.; to merge site/technologies/inc. to assume its

. liabilities and obligations, and the dati~ of adoption thereof, and to cause the same to

be filed with the applicable Secret:U) of State and to do aU acts and thgs
Ç;\WINOÙWSllEMP\An.$o:!J ~G.doc (4718)

Received T:me Dp.c.23. 6:42AM
EXHIBIT

29

EXHIBIT 30

A0557391

1 l, '3 2.,7~ '1 ~UJêV
CERTIFICATE OF OWNERSHIP
MERGING SITEfTECHNOLOGIESIINC"
INTO

In it Ofci at it Sl of SIIIl
of lh Sii or Qàl1ifra

F'-LED eJ
i i

DEC 292000

BlL1JïClI. JO:£

ti

~.

i

L SITE !§NQLQGIES. INC. ,
I, Jeff Ait, t~e Chief Executive Offcer and Secretary of Site Teclogies, Inc., do
hereby certfy:

¡

f

l

\

r.¡
i
¡ j

i

1. That I am the Chief Execuive Officer and Secetary of ths corpration.
2" That this corporation is duly organized and existing under the laws of
the State of California, the provisions of which permit a merger in the manner provided by Secton 1110 of the California Corporations Code.

i L f ! ~

3 - That this corporation owns 100 percent of the outstanding shares of siteftehnologiesJinc.. a corporation duly organized and existing under the laws of the State of Delaware, the provisions of which permit a merger in the manner provided by Section 1110 of the California

Corporations Code.
4, That the following resolution was duly adopted and approved by the board of directors of this corporation:
.

lRSOL ~ED~tfat Site 'Technologi!!~,Jnc".rrl!rge.,_aodJLliereÈTa§s
Cmerge.intojtself;.siteltechnqIQgles/inc;rits subsidiary; and assumes all of its obligations pursuant to Secton 1110 of the California Corporations Code"

The undersigned declares under penalty of perjury that the statements contained in the foregoing certificate are tre of their own knowledge.. Executed this twenty-first day of December, 2000._

.

aEXHIBIT

(; WINIlOWS\lEMP\ATTS02318.doc

30

EXHIBIT 31

STATE OF DELAWAR

DIVISION OF CORlrIONS
FILE 08:30 AN 12/29/2000 010001194 - 2300985

SEciTARY OF STArE

J" " I
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING

SfTEfECHNOLOGIESJlNC.
INTO

SITE TECHNOLOGIES. INC.

*******
Site Technologies, Inc., a corporation organized and existng under

the laws of

Califomia,
DOES HEREBY CERTIFY:

FIRST: That this corporation was Incorporated~on the first day of Februry,
1989. pursuant to the Corporations Code of the State of California, the provisions of which permit the merger of a subsidiary corporation of another state into a parent corporation organized and existing under the laws of said state.

SECOND: That this corporation owns all of the outstanding shares of the stock
of site/technologlesllnc. a corporation Incorporated on the fieenth day of June,

1992, pursuant to the General Corprations Law of the State of Delaware.
THIRD: That this corporation, by the following reslutions of its Sole Director,

duly adopted by the wrtten consent of its Sole Director, on the thirt-first day of
July, 2000, determined to merge Into itself said slte/technologieslinc.:

and -

RESOLVED, 1hat Site Technologies, Inc. merge, and it here.by does mergs, into itself,site/technologiesiinc...arn..aslßmes Æ! of its obligatiQ!;.
FURTHER RESOLVED, that the merger shall be effective upon filing with the Secretary of State of Delaware.

FURTHER RESOLVED, that the proper offcer of this corpration be and he or

she is hereby directed to make and execute a Certlfcate of Owership and Merger setting fort a copy of the resolutions to merge said site/technologies/Inc.
and assume its JiabiJties and obligations, and the date of adoption thereof, and to cause the same to be filed with the Secretary of State and to do all acts and things whatsoever, whether withIn or without the State of Delaware, which may be in anywse necessary or proper to effect said merger.

C:\TE\Sit - Delawa Cerficate ofMcrger fur sitetchnIogiesin..DO

EXHIBIT

31

EXHIBIT 32

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

SOFTWARE RIGHTS ARCHIVE, LLC §

~§

Plaintiff, §
§ §

§

Civil Action No. 2:07-cv-511-TJW

GOOGLE INC., YAHOO! INC., §
lAC SEARCH & MEDIA, INC., AOL LLC, §

and L YCOS, INC. § § Defendants. §

JURY TRIAL DEMANDED

DECLARATION OF J. CHRISTOPHER LYNCH
I, J. Chrstopher Lynch, under penalty of perjury, hereby make the following declaration.
All façts set forth herein are true and correct, and I make this declaration based upon my personal
knowledge and upon review of available records.
L I am a partner at Wyrick Robbins Yates & Ponton LLP and my practice is

primarily outside general counsel representation of technology-based businesses. I assisted
Daniel Egger in aspects of the 1998 acquisition of the V -Search Technology and patents from
Site Technologies, Inc. (the "V-Search Acquisition") and in the subsequent filing of an

assignment in 2005 (the "2005 Assignment"). A true and correct copy of the 2005 Assignent

is attached hereto as Exhibit A.
2. I understand that certain defendants in the Software Rights Archive LLC v.

Google, et ai., case pending in the Eastern District of Texas have accused Daniel Egger of
fraudulently fiing the 2005 Assignment for the express purpose of correcting a defect with
respect to the name of the pary conveying the patents he acquired in the V -Search Acquisition.

This allegation is based upon a number of factual inaccuracies.
165735-547719 v2
EXHIBIT

32

3. I was the attorney who supervised my staff

in the preparation of, and who advised

Daniel Egger to file, the 2005 Assignent. The purpose of filing the 2005 Assignment was not
to correct any defect in the name of the party on the instrument. I did not understand there to be

any distinction between the entity from which Daniel Egger purchased the patents in question
("Site Technologies, Inc.") and "Site/Technologies/Inc. at the time of the 2005 assignent. The
first time I heard of this issue was after the filing of the

,i

Defendants' Motion to Dismiss. Nor did

Daniel/ Egger raise this issue with me in 2005 or anytime prior to the defendants' allegation.

Daniel Egger never raised any issue with respect to the validity of the 1998 Bill of Sale or
assignments with me and never questioned the validity of his chain of

title.

4. The 2005 Assignment was filed to replace the then-misplaced 1998 Bill of Sale
and the 1998 Assignent used in the V -Search Acquisition. In or prior to October 2004, Daniel

Egger hadjasked me to assign the patents to an entity named Software Rights Archive, Inc.

When my staff reviewed the records at the Patent and Trademark 'Offce (the "PTO"), we
discoveredithat no previous assignment had yet been filed. I did not have a copy of the 1998

Bill of Sale or 1998 Assignent, so I asked Daniel Egger to locate them. He told'me that he

could not locate them. I advised him to file a replacement assigment reflecting the previous
)

transaction. I then supervised my staff in the preparation of the 2005 Assignment and Daniel
Egger executed it without further revision. I understand. that Daniel Egger later found the

missing 1998 Bill of Sale and the 1998 Assignment and filed them with. the Patent and
Trademark Offce.

5. My understanding is that the Defendants allege that Daniel Egger intentionally
represented that he was a president of Site/Technologies/Inc. and filed the 2005 Assignment to
mislead others as to his ownership rights. I had advisedvDaniel Egger to sign as the president of

16573.5-547719 v2

2

Site/Teclnologies/Inc. The basis for such advice was that, in 2005, the Site entities were no
j longer operating companies and a forrer officer or other agent needed to sign the 2005

Assignent. It was my belief that Daniel Egger retained a right to execute documents related to

winding up past business. transactions because he was a former president of
Site/Technologies/Inc. Because we were merely attempting to replicate the lost 1998
Assignent that we understood had already been made, it was my understanding that these
actions were fairly within the winding up authority,.of the companies, which were no longer
operating.
6. I was not aware of aný issue with respect to whether the 1998 Assignent

properly conveyed legal title to Daniel Egger. I understood it was a valid transfer. My /
Daniel Egger's status as a former officer and not an attempt to correct any error with respect to
the name of

recommendation to make Site/Technologies/Inc. a party to the 2005 Assignent was driven by

the party on the 1998 Assignment.

I declare under penalty of perjury under the laws of the United States of America that the
foregoing is true and correct.

~L ~r~cl
Executed ou ~ff, 2008

16573.5-547719 v2

3

EXHIBIT 33

SITE DISCLOSURESCHEOULE
Ths Site Disclosure Schedule, dated July i 1, 1997, is made and given puruat to Aricle II of the Stock Exchange Agreement between Deltaoint. Inc. ("Deltaoint") and Site\technologies\inc. ("Site") dated July 1 1, 1997 and the Pricipal Site Stockholders and Other Site Stockholders (the "Agrement").
Section 2.2(a). A schedule is atthed as Schedule 2.2(a).

t:
~.

,

f

Section 2.2(b). Goron Link, a holder of options to purhae i 0,000 shares of Site
Common Stock outstading just prior to the closing date of ths trsaction ha not yet

~. , i'.

signed the release in the fonn attched hereto as Schedule 2.2(b) agreing to teninate his option in exchange for$50. Site agees to use its best effort to obta the release as

~:' ;-,

soon as possible afer the close from Mr. Lin. Site ha received verbal agrent from
Mr. Link that he will sign such a release.

:":: Section 2.5. A list of Site's material assets and liabilties as of

the date hereofis

included as Schedule 2.5.

Section 2.4. SalIe VanDyke DeGolia, a stockholder or 2,500 shares of Series A Preferred Stock of Site and 450 shaes of Series B Preferred Stock of Site, ha not approved. the Stock Exchange and related tranactions. Site agrees to use its best effort to obtain such approval as soon as possible afer the close from Ms. DeGolia.
The following agreements require the prior wrtten consent of the other par to

\'

l'

~.

,.

r
,:;
~.

. such agreement prior to the assignment of such agreement to DeltaPoint at the closing of the Stock Exchange: (l) lnterpath - see Section 2.1 i (ix); and (2) BellSouth - See Section

:.
h
'..

~:

2. I I (ix). Site ha obtaed wrtten consent to assignent for each of these agreementS.
Sectlbn 2.7(a)(i). In Febniar 1997, Site applied for automatic extensions of

t
time to fie its 1996 Federal income ta retur, and its Nort Carolina State corporation
frachise and income tax returns. Copies ofthese applications are included as Schedules
:,.,. i.i.~

::

2.7(a)(ii)-A and 2.7(a)(ii)-B. These retus have not yet been filed.
Section 2.7(a)(II). In May i 997, Site received a letter from the North Carolina Departent of Revenue stating that its application for an extension of time to fie its State
tax return for i 996 has been denied. due to the fact that the required ta due was not paid
with the extension request. A copy of

?
'1'.: r" ~..

this letter is included as Schedule 2.7(a)(ii). Site's i ~96 State income ta liabilty does not exceed $750, including penalties and interest. Site has not yet paid this amount.
Section 2.7(a)(v). Site has a Nort Carolina State income tax liabilty not

J.

,

~~

r ~
;:

exceeding $750. See Section 2.7(a)(iii).
l :'"

O.\WPI1ECINISC05.DO

EXHIBIT

33

$¿~lt~. \0(0)

Site/Technologies/Inc.

Disclosure Schedule B: Patents

Invtion
Method Qr Appas
for hiexig, Searchig
and Displayng Daa

Applcaton NoJ

RegBl No.

Country
United States

5,54352 US946705
2.164.954
94 9,212.955

Paent Cooperation Tteå
Canc:da
Europecm Paent Ofce
~.l

(Geimany) (Freme)
(Great Biitai)

,'. '"

Method and Appaats

08/69.304

for Inemg, Searhig
and Displayg Data

United States

~.. ~: :i.

.

ContinuaUon In Par

~:: ~.. ~ .1 ,. ,.' ~~ .

,

;

:.

í" '~
::.: :.r. :\'.

"

k
~
r..
¡.

EXHIBIT 34

.,

1 CRAG M. PRI (077820)
MURRY & MURRY
3030 Hansen Way,

2 STEPHEN T. O'NEILL (115132)

JANICE M. MURRY (099996)

3 A Professional Corporation Suite 200
4 . Palo Alto, CA 94304- 1 009

FIL:ED
APR z 5 20bo j ¡¿
~~i:NANf 8~ eA8A8Y: e~i;J1K
tenited Stt'te§ êåf)~r:u.mpy Q9~lFt
ê.ar: ,Jqqe. a,ilifflmii:

5

[phone]
Attorneys for Debtor

6 7
8

UNED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
Case No. 99-50736-JRG- 11
Chapter 11

9
10

11 Inre:
, ..
;!

~
'"
00

12 Site Technologies, Inc., dba DeltaPoitit, Inc.
13

ô' '"
:e a

Debtor.
ErN

:". ~ U 0 p"

..i:g"'~O 14 ~r..!: '" 0 ~

, ~'ã:¡ ~
~d ~òt~ ~

No.: 77-0212760

fr"'g t3 ~ 15

~--~ .~:~~p§5 dg& 16 . o en 0 i ~
~~~ ~ ¡¡ ~~g~~ i: 17

.. 0 "":e~

'" zl~ 18

.0

DEBTOR'S FIRT AMENDED DISCLOSURE STATEMENT
Dated April 25, 2000

S ~

19

20
21

22
23

24
25

26
27

\i~
JM:slb-08

28
DEBTOR'S DISCLOSUR STATEMENT

I:\DAI Y\SITE\ cl-stmt. 1.wpd

.OR/GINAL
EXHIBIT

34

1

1997, and in November 1997 the Company acquired technology to develop SiteMaster 4.0 which

2
3

was released in March 1998. In March, 1998 the Company also released QuickSite 3.0, and in
May 1998 the Company released the enterprise edition of the SiteSweeper product.
55 In June 1997, as par of

4
5

the Company's continuing strategy to focus its

development, sales and marketing efforts on Internet software products, the Company sold assets

6 7
8

related to its Delta Graph softare, product. With the DeltaGraph sale, the Company's future
operating results depended on the successful development, introduction and commercial
acceptance of the Company's Internet softare products. IÍn.S.ep.teIlbërT99§:-thëCÒíIp~Yäl's'(?
'sl(hts~\T:Searc1I-eclinology,~anelrelãtëd Qat~t¡. In addition to further focusing the Company on

9
10
11
'" 0; '"

Internet softare products, these sales provided the Company with much needed liquidity.

5.6 The Company financed its operations primarily through private and public sales

.. ..

12
13

of equity securities, borrowings under a term loan, the private sale of debt securities and the sale

s .,

., 00

of the DeltaGraph product line, and other limited asset sales. Since its inception, the Company

~ SM ,ei 'l g'~g"0.. o
~8~~~

~a 14 has received approximately $24 million in proceeds from private sales of stock, convertible debt
15

f -., ~ " t3 ~ 0r~ g ~ ~~ () ~'"

~.... ~

and from the Company's two public offerings of public stock. The Company incurred net losses
of $8,159,000 for the year ended December 31, 1997 and $2,497,000 for the nine months ended
September 30, 1998, and had an accumulated deficit of $24,334,000 as of September 30, 1998.
5.7 In light of

5 ~~ ~ s "~o..S~ ". "~ :E~o."~., ~ .. ~~
~:a oo~

~ 8 ~ g& ~ ~-~~d-~:- 16 .. 0 . C'
17 18

0

its diminishing cash balances (due primarily to limited revenues from

::; Ø
ei ¡:

19

its newly introduced products), in May and June 1998, the Debtor significantly reduced its head

20
21

count from 33 to 11 and significantly reduced its expenses and operations in the areas of sales

and marketing. In order to conserve its limited remaining cash balances, the Debtor sharply
curtailed operational activities since June 1998 by, among other things, further reducing its non-

22
23

technology head count (eliminating sales and marketing personnel) and limiting related .
marketing expenditures. In December 1998, the Debtor shut down operations and laid off most

24

25 of its remaining employees.
26
5.8

During the twelve (12Ymonths preceding the Petition Date, the Debtor focused

27 its efforts on evaluating its strategic op