Vol. 18, No. 1 Interesting Twist in Patent Battle: We're sueing! No, wait you're buying The somewhat lengthy patent battle between Pavilion Technologies Inc. (Austin, Texas; www.pavtech.com) and KFx Inc. subsidary, Pegasus Technologies Inc. (Mentor, Ohio; www.pegasustec.com) last reported in ISR, Oct./Nov. 2000underwent two sea changes this year. The suit, originally filed by Pavilion, involved the alledged infringement of 26 U.S. patents. For the most part these patents dealt with software that implements neural networks, expert systems or both, to control and optimize processes such as power generation process solutions. In April 2001 both companies announced that they had agreed to dismiss all litigation "in order to explore possible combinations." "While Pavilion remains steadfast in the diligent and uncompromising protection of our strategically valuable intellectual property, Gary (Gary Nicholson, CEO of Pegasus) and I have concluded that taking these steps together may well provide both companies with a singular opportunity to initiate major progress in the advancement and delivery of enterprise optimization solutions to our target markets," said Pete Perialas, president and CEO of Pavilion. Something was up, and sure enough on June 9 KFx and Pegasus Technologies Inc. announced an agreement with Pavilion that would result in the acquisition of Pavilion's power generation business segment and rights to Pavilion's process optimization technology for utility-based coal fired boilers and gas turbines. Terms of the proposed transaction include guaranteed payments to Pavilion of $10 million over 24 months plus royalties of up to $5 million over four years. The proposed transaction is expected to provide Pegasus with an installed base of 79 units. International rights are also included in the proposed transaction. A definitive agreement will be negotiated and will involve aquisition of Pavilion's Power Perfector, Software CEM, Environmental Portfolio Manager software. Also, Pegasus expects to gain Pavilion's existing backlog and work in progress, future maintenance and reseller relationships for the power generation segment. Table of Contents Web Site © Copyright 2001 by Lionheart Publishing, Inc. All rights reserved. Lionheart Publishing, Inc. 2555 Cumberland Parkway, Suite 299, Atlanta, GA 30339 USA Phone: 770-431-0867 | Fax: 770-432-6969 E-mail: lpi@lionhrtpub.com Web: www.lionheartpub.com