The Violation Of Think3

Yesterday one of my readers left a comment on my post titled “I Know Who Bought Think3” pointing me to this page on Bloomberg Business Week that gave more information on what exactly happened to Think3. Here is part of the article:

Think3 Inc., a developer of computer-aided design software, filed for Chapter 11 protection on May 18 in Austin, Texas, and was given interim authority on May 23 for what will eventually be a $1 million financing. The final financing hearing will take place June 21.

The Austin-based company, which has been incurring losses for several years, had both a branch and a subsidiary in Italy. On request of creditors, a court in Bologna, Italy, put the Italian subsidiary into bankruptcy in March. The company said in a bankruptcy court filing that the Italian trustee took over both the Italian subsidiary and the company’s own assets in Italy.

The Italian trustee also took over the subsidiary’s and the company’s bank accounts in the U.S.

Think3 was acquired in September by ESW Capital LLC.

Last year it licensed some of its software to Versata FZ LLC for $3 million. The company explained how the Italian trustee purported to terminate the license, even though Versata contends it wasn’t possible under U.S. law. The company said there is a threat the Italian trustee will attempt to terminate other licenses given over the years.

The Italian trustee directed software licensees to make payments to him rather than to the U.S. company.

The primary debt is a $23 million tax liability in Italy.

In my book this is nothing less than the violation of a company. A systematic and planned violation. If you sell the IP of a software company how is it supposed to survive? What is the point in appointing a Chief Restructuring Office for a software company which no longer has its IP and hence a revenue stream? What is left to restructure? The whole point of restructuring is to re-negotiate payments and contracts so that the company can continue with its operations and return to profitability. Not deprive it of its precious assets and leave it to rot. So after restructuring does Think3 plan on cooking up another CAD and PLM system from scratch? WTF?

The pieces are slowing falling into place. Versata bought the IP of Think3 for $3 million, which is peanuts. Of the microscopic kind. I am saying that  because I happen to have a good idea of the worth of IP these days since I recently sold the IP of my company. Then ESW Capital went ahead and bought the empty and worthless Think3 in a stock transfer. Or maybe ESW Capital bought Think3 first and then sold the IP to Versata. Either way, Versata ended up with the assets of Think3 at a throwaway price and ESW Capital inherited the liabilities thereby setting it up to go bankrupt.

There are laws preventing such systematic gutting of companies to safeguard the interest of employees, creditors, customers, etc. That’s why the Italian trustee has terminated the sale (perpetual license) of Think3′s IP to Versata. The trustee has already managed to secure the www.think3.com web site and has brought the Think3 Customer Care site back online as well. I am very interested to see where this is headed.

When I started following this story months ago, some in the CAD media dismissed this as an issue of an employer not paying its employees. Many of them didn’t find the story alarming enough to write about and some still don’t. I didn’t ask to become a part of the media. It just happened along the way. And as a consequence I have been enjoying a great deal of privileges as well. However, I realize that those privileges come with responsibilities as well.

The most common reason given by some in the media for not covering such stories is the fear of getting sued. For the record, when I first started writing about Think3 I was served a cease and desist notice by a lawyer in Mumbai representing a certain overseas company. I actually wanted to publish it as a blog post but decided against it. Maybe one day I will. Just for the fun of it.

  • Roger

    Post about the layer post about the layer! :D
    I just hope all this finish well for the employees and customers, as they’re the less resposible

  • http://www.deelip.com Deelip Menezes

    I am more interested to know what became of the people who ran Think3 into the ground.

  • Nainar

    Deelip, these possibly are precisely the grounds on which the sale was reversed.When such a fraud was carried on in the “Land of the Free”, while the affected persons are elsewhere in the globe,how does one fight?One hour of legal consultation costs $800!!How is a set of employees who were not paid expected to fight such a battle across continents?This is precisely the reason why such frauds can happen to any one because no one will have the energy to fight a long battle. This is a clear wake up call for the law makers in the US, that the system is being abused but I really doubt they will ever.The Italian trustee showed guts reversing the sale.Our case comes up for hearing soon and whether the Indian Judge will show the same guts, is to be seen. And after all this, will the US govt wake up to the reality that their so called “Free Market” is not being fair to every one, or takes undue advantage of being one of the countries where legal costs are the highest, preventing such fraudsters to perpetrate even further damage.

    And for the record, as you said, the legal threat is what is being used to silence any one who speaks up.We did recieve it too, for talking in public,but heck, let them come to the “Land of the brave” and sue us.

    And we are all so glad atleast now it is no longer a case of disgruntled employees fighting. Because  when no one else is fighting such injustice some one has to. It is the previous management who has to fight this fraud.But they have disappeared and who knows, they may even be part of the whole chronology. As techies, we stay away from all this corporate mumbo jumbo, reposing faith on Boards to take care of employees, but there is no mechanism to fight is such a faith is taken for a royal ride.There is something called Fiduciary Duty, but when not exercised, the case has to be taken to the court. And how does a set of employees worldwide, who are already weak fight the case?

  • http://pulse.yahoo.com/_G6T4SMV6RYN2IIWHSGXMZSG7P4 ron

    You must not get out much. Here is just a sampling of the broad coverage given by the CAD press on the think3 situation:

    MCADcafe: “think3 is back in business! (?)”
    http://www10.mcadcafe.com/nbc/articles/view_weekly.php?articleid=959196

    MCADcafe: “Another One Bites the Dust: think3 Declares Bankruptcy‎”
    http://www10.mcadcafe.com/nbc/articles/view_weekly.php?articleid=951922

    Desktop Engineering: “Think3: Where Does It Go From Here?”
    http://www.deskeng.com/virtual_desktop/?p=3751

    Desktop Engineering: “Think3 Inc. Acquired by Versata Enterprises”
    http://www.deskeng.com/articles/aaaysb.htm

    CAD/CAM News: “Think 3 restarts its operations”
    http://www.cadcamnews.in/2011/05/think-3-restarts-its-operations.html

    CAD/CAM News: “think3 Inc. Files for Chapter 11 Bankruptcy Protection”
    http://www.cadcamnews.in/2011/05/think3-inc-files-for-chapter-11.html

    WorldCAD Access: “Versata apparently loses think3 license, trademarks”
    worldcadaccess.typepad.com/…/versata-apparently-loses-think3-license- trademarks.html

    WorldCAD Access: “Notes about think3 from an OpenMind meeting”
    worldcadaccess.typepad.com/…/notes-about-think3-from-an-openmind- meeting.html

    upFront.eZine: “An anonymous employee alerted us to think3 closing several of its offices in the USA.” October 26, 2004
    http://www.upfrontezine.com/2004/upf-404.htm

    upFront.eZine: “Just how withered is Think3?”
    http://www.upfrontezine.com/2011/upf-688.htm

  • http://www.deelip.com Deelip Menezes

    Thanks for these links. You should also realize that most of these writing are in April/May. This story really broke out in October/November and nobody bothered to touch it back then for fear of being sued, I presume.

    As they say, better late than never.

  • http://www.deelip.com Deelip Menezes

    I asked Versata for interviews and was denied as well. But that didn’t stop me. I started writing about them nevertheless after which I was served the cease and desist notice. I called their bluff and continued writing after which the company started engaging with me directly. I did not get any exclusive because I was from India. Versata started to speaking to me because I would not stay quiet like the others.

    In fact, I first heard about this story from another CAD editor. Think3 employees did not start contacting me until they say that I was the only one carrying the story back then.

    No story to tell? Ha! What did you expect? ESW Capital and Versata would issue a joint press release stating that they were gutting Think3? Is that was the CAD media has been reduced to? Parroting press releases, quoting from press kits and churning out “in-depth” reviews?

    I thought there was something called investigative journalism and balanced reporting.

  • Nainar

    Raykurland asked for interview as well and every one was given a cold shoulder. http://raykurland.com/2011/01/20/versata-gives-think3-inquiries-the-cold-shoulder/ . And pretty much every one gave up and started covering other things. It is not in darkness everything happened. Think3 Italy employees went on a strike which was covered in Republica newspare in October. In January they went on a procession in Bologna. Think3 India got news coverage in mainstream television, and print media, hilighting what is going on. No one woke up even after that. Deelip kept writing and it became a platform not only for employees but many anxious customers also started following the story sharing their views. MCAD Customers are anxious because they need to be in touch with the techies, second level management and not just Corporate faces. Lack of that made them anxious and Versata had none to show. That is when Versata realised they need to engage Deelip to get their message across. They started doing it only recently giving interviews to various bloggers because they know now that MCAD as a community, a pretty closed one too, not just a bunch a vendors and users.

    Cease and Desist notices are standard operating procedure for Legal people to shut other people up. And many bloggers might have shut up if they received one.I know for sure one blogger tweeted that he will end up spending his pension in legal cases if he covered the story. Have to hand it over to Deelip for throwing it in the dustbin and still provide a balanced view.

    This will be a clear case study on M&A and fixing lacunaes in Global trade which can be abused if some one wants to. And this is all being done within the legal framework of the “Land of the Free”, the United States. Atleast for this sake, magazines should take up the story, on how US legal system allows such systematic abuse of Intellectual property generated worldwide, just because subsidiaries worldwide wont have representation in the US or find it prohibitively expensive to get such acts reported and acted upon by Govt agencies.

  • JhonJhon

    Deelip, I would suggest you to indagate into the partecipation of ESW capital in Corel Corporation. I found stange … Corel Into a CAD market.
    You can reach some SEC official document on the web, you can find some partecipation by ESW capital (and other rappresentant name, the same in carge of Think3) in corel corporation. For me sounds a bit strange.
    Try by tiping on google : SEC ESW COREL …….

    Have a nice investigation!

  • http://www.deelip.com Deelip Menezes

    I did previously mention that SEC document you are referring to to draw a relation between ESW Capital, Versata and Trilogy. I assume ESW Capital owns stake in a number of companies. Nothing really strange in that.

  • JhonJhon

    I’m sure, nothing strange. But the timing of the problems with think3 and the Corel announcement, make me some suspect. I think the corel CAD will not so powerfull like ThinkDesign ….. maybe for now?
    In this “casinò″ everything can be contemplete …. or not?

    Just a suspect …… not more.

  • Shantanu Joshi

    Deelip, reg. the statement – “The pieces are slowing falling into place. Versata bought the IP of Think3 for $3 million, which is peanuts.”

    This is what I read – “(The way these things get calculated, the “actual” purchase price was $26 million: $3 million for the internal transaction + $23 million of debt.)” – here – http://bit.ly/ld6QYm

    In your opinion, would that be closer to the appropriate value of the IP?

  • Shantanu Joshi

    Deelip, reg. the statement – “The pieces are slowing falling into place. Versata bought the IP of Think3 for $3 million, which is peanuts.”

    This is what I read – “(The way these things get calculated, the “actual” purchase price was $26 million: $3 million for the internal transaction + $23 million of debt.)” – here – http://bit.ly/ld6QYm

    In your opinion, is that close to the market value of the IP?

  • http://www.deelip.com Deelip Menezes

    The IP wasn’t sold for $26 million. It was sold for $3 million.

    As far as it real value, one would need to take a look at it more closely. But $3 million would definitely not be it.

  • Nainar

    Thanks Shantanu!We were digging for this information and it is clear now.The court documents say clearly they owe money to the subsidiaries worldwide.If the actual price is $3million + debt, where the money meant for the debt?If Versata paid that money, part of the debts would have been cleared right? And Think3 was making close to $40million http://www.cadalyst.com/manufacturing/mcad-modeling-methods-software-strategy-midrange-modelers-ii-10388?page_id=2  — So, for a company with that kind of potential, what will be the worth of IP? Even if you count 50% decline in revenue, it is still $20million, and @$40million in debt, the major one being taxmen, who can be negotiated with. Does this call for bankruptcy? It is not debts that made Think3 bankrupt,it could have been turned around, but selling IP has set it up for bankruptcy which is what the Trustee is trying to reverse.

  • JhonJhon

    It was monday 23 of May, in the  mail  “Restoring Confidence”  Austin Scee says :

    ….. We continue to make progress revitalizing the products we acquired from think3 Inc, and we expect to release version 2011.4 this week…..

    The week is passed now, it was 31 of May …… and the release is not been released. Before promise ………

  • rocky

    Did anybody try to install “new release” delivered by Versata ?
    I tried, and when the install succeed, not so many things are working
    The new dll are not registered, thinkteam is no working anymore. How can they claim they improve and deliver new release ????
    Who can believe that they will increase the speed by 100 while thinkdesign is already one of the fastest sCAD software.

  • JhonJhon

    I tried …… I tried, I have the same problems. I think they miss in compiling Thinkteam. I don’t know If they know that thinkteam is a product to be installed. Did you try smart objects …. in the first release they miss them! Good Luck

  • JhonJhon

    PS: About the speed can be done 100% and more. If you install Thinkdesign on laptop, then you put your laptop on Redbull F1 you can increase the speed a lot :), or maybe they are a wizzard …..

  • Drnx2000

    Nainar, everything you posted here about the U.S. means absolutely nothing.  There have been clear wake-up calls in this country for years, our lawmakers don’t care about anything or anyone unless it means padding their wallets with new restrictions.  The whole system is corrupt.  And the free market…yeah we know it isn’t fair, it isn’t fair for imports or exports.
    I don’t know the answers as to how these employees can fight, but I hope for their sakes they keep up the good fight.

  • Drnx2000

    Nainar, everything you posted here about the U.S. means absolutely nothing.  There have been clear wake-up calls in this country for years, our lawmakers don’t care about anything or anyone unless it means padding their wallets with new restrictions.  The whole system is corrupt.  And the free market…yeah we know it isn’t fair, it isn’t fair for imports or exports.
    I don’t know the answers as to how these employees can fight, but I hope for their sakes they keep up the good fight.

  • Toto

    And now Trilogy strategy… The Automotive
    Industry is back!

    Read that:
    http://www.trilogy.com/products/complexity-manager

  • Guest

    The thinkDesign IP seems to be fair game for everyone. After Versata it is now Trology that are hawking the product!
    “Trilogy also helps automotive OEMs reduce complexity through the use of Think3 software. Trilogy’s Think3 design solutions have helped producers optimize the entire product development process for over 30 years, leading to better, more innovative products.”

  • Jhon

    there is a new web site http://www.think3.versata.com

  • Jhon

    So, the actions from the Italian Court seems not so hard :)

  • Sid

    I just cant understand this – “Trilogy’s Think3 design solutions”. Did Versata lease/sell the IP to Trilogy now?

  • http://www.deelip.com Deelip Menezes

    I have sought an explanation from Versata. Let’s see if they reply.

  • http://www.deelip.com Deelip Menezes

    I am told that they will be taking down that Think3 part on the Trilogy web site.

  • Nainar

    It is all one family!Wont be surprised if Versata licensed its Configurator technology to Trilogy.They are busy hawking Think3 Technology developed for the last 30 years,but want the people who developed it and Think3′s creditors to disappear just like that.

  • 1234

    aha, and this page took them several weeks to create? 

  • JhonJhon

    Do you think the customers are aware of this web site?
    Versata ask to the brand in this page the possibility to be “publicate”
    http://www.think3.versata.com/success-stories

  • Guest

    I wonder how taking the ‘Think3 part’ off the website will make it legal for them to use the code!! I am sure it is safe to bet my bottom dollar that Trilogy’s clients buying this product will find references to ‘Think3′ in release notes, help files, et all!

    Soon expect an invite from Trilogy for a webinar!!

  • JhonJhon

    OFFICIAL COMMUNICATION TO CUSTOMERS
    Dear Customers, I am writing to clarify a few key legal points, as to avoid any misinterpretation that may be caused by mis-information. On April 12, 2011 the Court of Bologna, Italy declared the bankruptcy of Think3 Inc. Pursuant to Art. 72 of Italian Bankruptcy Law (R.D. 16.03.1942, N. 267) the Trustee dott. Andrea Ferri has terminated the Technology License Agreement entered into and between Think 3 Inc. and Versata FZ-LLC on October 7 2010. On May 2 2011 the Court of Bologna issued an order in which it is stated that the contract is considered terminated to all legal aspects.  Despite this clear ruling Versata is circulating false information about the Italian Legal Procedure. I want to point out that the Italian Procedure regards Think3 Inc. as a single company that is under the Italian bankruptcy procedure and not as a third entity or a subsidiary company of Think3 as is being alleged by Versata.  All goods (including IP), employees and goodwill are located in Italy and therefore the Court of Bologna is protecting the assets of the bankruptced company.  The US Court has no jurisditcion against the Italian Bankruptcy Procedure. Therefore the opening of the Chapter 11 process does not give any rights to Versata. Versata is sendig to Think3 clients messages illegally using the think3 trademark and advertising think3 products in order to distract customers.  The use of http://www.think3.versata.com/ domain name is also illegal. Therefore, Think3 is the only owner of the intellectual property rights of the software (ThinkDesign, Thinkteam, TD PLM etc…) and it is not permitted in any way the use of this software without the required authorization of dott. Andrea Ferri through legal sales by Authorised Think3 VARs.  All contracts related to license agreement entered into and between Versata and third parties has to be considered null and void and all payments concerning the use of think3 products have to be effected to the Italian Bankruptcy Procedure. Very soon we will be sending you more information about the future plans for the company. Best Regards, Dott. Andrea Ferri

  • Toto

    Deelip tweet of the 1 june:”Versata launches Think3 web site at last.A customer writes to me bitching that they used his image without taking his permission…”This is what I think, Versata certainly think that they have all rights to the customer base like for the IP although some customers of the success stories have certainly not contract with Versata!And for the link of trilogy, they have change this link… Strange Deelip? you write “I am told that they will be taking down that Think3 part on the Trilogy web site.” Where is the name of Think3??  You remember the Post of Guest  at 06/04/2011 04:53 AM in reply to Toto …

  • http://www.deelip.com Deelip Menezes

    The reference to Think3 has been removed. See http://www.trilogy.com/products/complexity-manager

  • Toto

    Yes,I see that and I understand now why Mr. Nainar speak aubout configurator technology !!!   But  the original reference was: 

    “Trilogy also helps automotive OEMs reduce complexity through the use of Think3 software. Trilogy’s Think3 design solutions have helped producers optimize the entire product development process for over 30 years, leading to better, more innovative products.”

  • Chris Ney

    Versata also bought companies with solid customer bases like ETI and Tenfold. All Tenfold customers, for example, were forced to switch to a windows platform, which caused some of them enormous grief. The global support structures in use at Versata to handle tickets is worse than terrible when complaints get really heavy, they set up a phone conference with the frustrated company heads and allow them to vent to the reigning and temporary head of , say, ETI, who promises to put their problems at the top of the list.– with the proviso that if they take Platinum Support, all their worries will be washed away. I know, I attended a few of these meetings and became so disgusted that I am thinking of returning to my original career – actor. I will take begging for lousy parts over lying through my teeth any day.Chris Ney

  • Jhon

    Thank you Reastman, I think your reseach reflect my ( and I think our view of “Versata Company”). In my opinion the old customer of Think3 who buy the software can take time whitout pay anythings to Versata ( …. for what kind of assistance? or Release … are you waiting for 2011.4 as the CEO promise?), who was in ASF the good way will be to ask the Think3 in Italy for the password. For the company that need to buy a Cad Software …. 

  • http://www.deelip.com Deelip Menezes

    People, please refrain from posting comments as other people. Be man enough to take responsibility for your own words.

  • Jhon

    Think3 Official ThinkDesign 2011 BetaOfficial Thinkdesign 2011 Beta version is entering into the build phase ready for its imminent release.BOLOGNA, Italy, June 10, 2011 – The development of the new think3 proceeding rapidly. In just the first weeks after starting the R&D team has been hard at work and the Official Thinkdesign 2011 Beta version is entering into the build phase ready for its imminent release.

    Some new functionalities available in this release covered:
    - Assembly: New Mating management, Gear Constraint, Assembly Feature,
    - Part Modeling: Rib, ISM, Cut/Split Solid
    - Sheet Metal
    - Sketcher
    - Geodesic Curves
    - MPC-CP: symmetry G2-1 on curves and surfaces
    - Line: Curve and Arc approximation
    - Invert Surface
    - Mold Design: Cooling, shrinking, base, electrode libraries
    - save as pdf for .e2 and .e3
    - Material ManagementAvailabilityThinkdesign 2011.1 will be available in Italian, English and Japanese versions. When ready the update will be posted for downloading on think3’s customer care website. Customers having signed a contract with Versata can take advantage of the Grace Period that think3 is offering to them and so they will be eligible for this version.Watch this space for further announcements.

  • shekhar

    very nice blog

  • http://www.domain-hosting-services.in domain and hosting

    I am not familiar with this information. After reading this post, I have interest to know about think3. Can anyone tell me, What is mean by think3? 

  • Tnk
  • Pingback: A Conversation With Becky Roof | Deelip.com

  • http://www.mactonweb.com web development bangalore

    Great blog.

  • http://www.mactonweb.com web development bangalore

    Great blog.And this site is new for me.

  • james craig

    The thinkDesign IP seems to be fair game for everyone. After Versata it is now Trology that are hawking the product.

  • http://www.adsyou.com/ شقق للبيع في الاردن

    They are busy hawking Think3 Technology developed for the last 30
    years,but want the people who developed it and Think3′s creditors to
    disappear just like that.

  • http://www.mactonweb.com/ Web design London

    The whole system is corrupt.  And the free market…yeah we know it isn’t fair, it isn’t fair for imports or exports.

  • http://www.webhostings.in Website hosting india

    It is awesome list.I wasn’t aware of this feature of this article..thanks!

  • http://www.adsyou.com/ شقق للبيع في الاردن

    It is all one family!Wont be surprised if Versata licensed its Configurator technology to Trilogy.




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