IMSI to Buy CADKEY

September 5, 2003 | Comments

excerpted from CADCAMNet
September 5, 2003

International Microcomputer Software Incorporated (OTCBB symbol: IMSI.OB) has signed an agreement to purchase the assets of CADKEY Corporation, developer of one of the first mechanical CAD software products for personal computers. The deal marks the end of a lengthy lawsuit between CADKEY and Harold Bowers concerning tablet-overlay templates conceived and patented more than a decade ago.

Back in the 1980s, both Bowers and a company named Baystate Technologies developed overlay templates for CADKEY. Bowers’ products were called Designer’s Toolkit and Geodraft. The latter, which had special functions for annotating geometric tolerances, was licensed from George Ford, an engineer with Heinemann Electric. Bowers applied for government protection on his template in February 1989, and in 1990 the U.S. Patent and Trademark Office granted him patent number 4,933,514.

Baystate’s product was called DraftPak and was not covered by patent protection. Baystate was founded by CADKEY’s current president, Robert Bean, who later purchased the CADKEY product line from its original owners. The litigation began in 1991 when Baystate and Bowers were both developing third-party software for CADKEY. It continued after Baystate acquired the CADKEY software and changed its name to CADKEY Corporation. According to a U.S. Court of Appeals ruling, the litigation began when Baystate sued Bowers and attempted to overturn his patent.

A facsimile from Bowers’ patent application of the CADKEY overlay template that triggered the lawsuit. (Click image to enlarge)

A facsimile from Bowers’ patent application of the CADKEY overlay template that triggered the lawsuit. (Click image to enlarge)

In the year 2000, the suits between Baystate (now CADKEY) and Bowers came to trial. By this time, the action had become more complex. Bowers not only asserted that CADKEY violated his patents and copyrights. He also claimed that CADKEY had breached the license agreement that accompanied Designers Toolkit and Geodraft by using them to “reverse engineer” features incorporated into CADKEY’s own tablet menus.

The jury found in favor of Bowers, awarding him $1.95 million for copyright infringement, $3.8 million for breach of contract, and $233,977 for patent infringement. On January 29, 2003, a three-judge federal appeals court upheld the jury’s verdicts for copyright infringement and breach of contract, but overturned the patent-infringement claim. CADKEY appealed the breach-of-contract ruling to the U.S. Supreme Court, which declined to hear the case.

In August 2003, Bowers’ attorneys began legal actions to collect the damage awards, which CADKEY could not afford to pay. CADKEY’s annual sales have declined to just $4 million, according to Bean, down from just over $7 million three years ago. On August 22, CADKEY sought Chapter 11 bankruptcy protection and reached the agreement with IMSI to sell all its assets for $2.5 million. IMSI’s offer is conditional upon approval by the bankruptcy court, which would entertain higher offers from other bidders. CADKEY plans to ask the bankruptcy court to approve IMSI’s offer no later than October 7, 2003.

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