Dear Charles;

I am legal counsel to CBTF Co., Inc., inventor of the US patented twin foil, canting ballast system (Technology) used on many Maxi yachts. You and I were previously introduced by John Gresson while I was based at Simpson/Grierson in 1999-2000 as a Prada legal/rules advisor, and I also had the pleasure of being a "Thirsty Thursday" guest aboard your yacht (ANTAERES?).

I write you to informally address a matter of import involving both CBTF and your newly launched yacht MAXIMUS. After MAXIMUS recently entered the US and hauled-out in Newport, it was learned she was equipped with a canting ballast, twin-foil control system that fell clearly within the scope of CBTF's pending U.S. Patents. CBTF has verified that no one -owners, designers, and builder included - sought or received permission to use the Technology, nor was the US $87,500 license fee paid.

As an experienced Barrister and accomplished businessman, I know you appreciate the necessity for CBTF to aggressively act upon information indicating infringement upon its patent rights which would include the unauthorized use and incorporation of the Technology into MAXIMUS. This is especially the case given the widespread publicity attendant to Maximus's emergence upon the Maxi circuit, and her current presence and use in the United States for domestic commercial purposes. By not taking appropriate action, CBTF would risk claims of acquiescence and waiver, and loss of valuable commercial license rights costing millions of dollars to develop.

However, before presenting you with the requisite "cease and desist" demand and, if our client elects, seeking extraordinary pendente lite relief under 35 USC sec. 271 et seq., to prevent MAXIMUS 's departure from the U.S., I thought it perhaps useful to query as to your willingness to explore possible alternatives that might vitiate need for formal action and thus avoid the otherwise inevitable and negative publicity such actions would engender for both parties. Such a discussion would allow you an opportunity to consider and weigh the comparative cost, negative consequence and probable outcome if CBTF pursues enforcement measures, with the option of paying what is due and joining the ranks of other CBTF licensees such as Randall Pittman, Neville Creighton, Roy Disney, Bob Oatley and Frank Pong.

It is essential that CBTF protect and enforce its proprietary rights in the Technology, and that cannot occur if unauthorized, high-profile use occurs with impunity as appears to be the case with MAXIMUS. We understand that you have plans to replicate MAXIMUS's infringing system for use in a production boat line, all of which make patent and enforcement that much more essential. While there is only so much that can be done to police and prevent infringement world-wide, those remedies allowed by United States law - arrest, seizure and destruction, injunction preventing importation, sale, or use, compensatory damages no less than the royalty fee customarily paid, trebling of damages when infringement is intentional, award of attorneys fees and litigation cost, and prejudgment interest to name a few - are available to CBTF when infrigers venture into U.S. jurisdiction as is currently the case with MAXIMUS.

I hope to hear from you at your earliest convenience and in any event before 5:00 p.m.(Pacific Time) tomorrow May 19th, following which I have been authorized and instructed to take affirmative action to protect CBTF's interests and abate the subject infringement if you should fail to call. I can be reached this evening until about 11:00 p.m. either by mobile () or at home (), and will be available tomorrow at the numbers listed below. While it is unfortunate that our paths should cross in this manner, I do look forward with confidence, to working with you toward a mutually satisfactory resolution of this issue.

Respectfully,

Douglas D. Holthaus, Esq.
ADKINS & HOLTHAUS
Property & Marine Lawyers

Response

Dear Douglas,

In reference to your intended phone call today please be advised that I will not be available at that time since I will be sailing aboard Maximus preparing for the Rolex Transatlantic Challenge.

In reference to your email message transmitted at 1438 hrs on 19 May 2005 (New Zealand time).

Firstly, Maximus is not "equipped with a canting ballast, twin foil control system that [falls] clearly within the scope of CBTF's pending patents". The yacht's owners (who designed and fabricated Maximus and its appendages) and their legal advisors (both in the United States and New Zealand) have studied your client's pending patents. We are totally satisfied on clear factual, technical and legal grounds that the pending patents are not infringed. Your allegations demonstrate that neither you nor your client appear to have any corresponding knowledge or understanding of the characteristics or configuration of Maximus' design and operation.

Second, "the presence and use in the United States" of Maximus is not, contrary to your assertions, "for commercial purposes". You acknowledge the emergence of Maximus on the Maxi circuit. It is, no doubt, arguable whether yachting regattas of this type, and their attendant activities, are commerce of any kind. Even if they are, then the Maxi circuit as a whole, and the Rolex Transatlantic race in which Maximus is next scheduled to compete in particular, are manifestly international in nature.

Third, and looking at the allegation of "use in the United States for commercial purposes" from your client's standpoint, it will be unable to show any activities such as sale or use in manufacture in the United States of those parts of Maximus alleged to have infringed your client's pending patents. Even if your client could establish the more fundamental aspects of its claims (such as actionable infringement), which it cannot, Section 272 of your Patent Law would be readily available as a defence to such claims in the present circumstances.

Fourth, it is neither appropriate nor necessary for a patent holder to act aggressively or otherwise upon misinformation of the kind recorded in your message. Your catalogue of draconian remedies, and the rather crude threat of adverse publicity can hardly be expected to influence owners' position, when you obviously haven't troubled to ascertain the correct factual and legal position.

Fifth, and from our point of view, the unwarranted attempt in your message to extract payment to which your client is not entitled, exposes your client to damages for any adverse consequences wrongfully inflicted on our yacht or its international campaign. Since you have raised the topic of publicity, I doubt that this would be a particularly good look on the part of your client within the circles in which it no doubt seeks to promote the subject of its pending patents.

We cannot stop your client advancing spurious allegations in the manner threatened by your message, but you may be sure that any such allegations will be strenuously denied, and any available redress pursued against your client. Should you or your client nonetheless elect to initiate court action, please ensure that both your message and this response are clearly brought to the attention of the judge at the earliest opportunity, in keeping with usual attorney's obligations of candour to the court.
Yours faithfully,
C R St Clair Brown