1007-00003 · Whitfield & Gaines PLLC · Correspondence

ridgeline-approval-request-letter.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law

One Fountain Square, 11th Floor Detroit, MI 48226 Telephone: (313) 555-7200 Facsimile: (313) 555-7201 www.calderwoodharkness.com

May 15, 2025

VIA EMAIL AND OVERNIGHT COURIER

David Mercer, Partner Ridgeline Capital Management, LLC 600 Lexington Avenue, 32nd Floor New York, NY 10022

Re: Request for Written Consent to Authorize Settlement — Pinnacle Innovations LLC v. Vantage Mobility Systems Corp., No. 2:24-cv-00187-JRG (E.D. Tex.)

Reference: VMS Operating Agreement § 7.04(c) — Required Board-Designee Consent

Calderwood & Harkness LLP Matter No. 1007-00003

Dear Mr. Mercer:

1. Purpose and Authority

Calderwood & Harkness LLP represents Vantage Mobility Systems Corp. ("VMS"), a Delaware corporation headquartered at 4200 Innovation Drive, Auburn Hills, Michigan 48326, in the above-referenced patent infringement action pending before the United States District Court for the Eastern District of Texas. As you are aware, VMS is a portfolio company of Ridgeline Capital Partners Fund IV, LP ("Fund IV"), which has served as the majority equity holder of VMS since the 2019 recapitalization transaction. Fund IV currently holds approximately 62% of VMS's outstanding equity, and Ridgeline Capital Management, LLC ("Ridgeline") serves as the general partner and investment manager of Fund IV.

We write to you on behalf of VMS and its VP & Associate General Counsel, Rachel Nguyen, to request your written consent, in your capacity as the Ridgeline board designee to the VMS Board of Directors, to authorize VMS to enter into a proposed settlement of the above-referenced litigation. As described more fully below, Section 7.04(c) of the Amended and Restated Operating Agreement of Vantage Mobility Systems Corp., dated as of October 1, 2019 (the "Operating Agreement"), provides that any single litigation expenditure or settlement in excess of two hundred fifty thousand dollars ($250,000) requires the prior written consent of the Ridgeline board designee. The proposed settlement calls for a lump-sum payment of three hundred eighty-five thousand dollars ($385,000), which exceeds the $250,000 threshold specified in Section 7.04(c) and therefore triggers the consent requirement.

Accordingly, a form of Written Consent is enclosed herewith as Enclosure 1 for your review, execution, and return. The purpose of this letter is to provide you with a comprehensive summary of the litigation background, our defense assessment and risk analysis, the proposed settlement terms, the insurance coverage and funding structure, and our cost-benefit rationale supporting the recommendation to settle. We believe, and Ms. Nguyen concurs, that the proposed settlement represents a favorable and prudent resolution for VMS and its stakeholders.

2. Litigation Background

2.1 The Parties and the Asserted Patent

The plaintiff in this action, Pinnacle Innovations LLC ("Pinnacle"), is a Texas limited liability company and a non-practicing entity ("NPE") that holds a portfolio of approximately thirty-five (35) United States patents acquired from DataStream Automotive, Inc. ("DataStream"), a defunct Illinois corporation that was dissolved in 2021. Pinnacle is managed by Grayson Holt and does not manufacture, sell, or otherwise commercialize any products or services. Pinnacle's litigation activities are financed by Arcadia Litigation Finance, LP, a Delaware limited partnership specializing in patent monetization and assertion campaigns. The involvement of a professional litigation funder is consistent with the broader pattern of NPE assertion strategies in the Eastern District of Texas and informs both the risk profile and the settlement dynamics of this case.

Pinnacle asserts a single patent in this action: U.S. Patent No. 9,847,312 B2 (the "'312 Patent"), titled "System and Method for Aggregated Vehicle Telemetry Data Transmission Over Cellular Networks," which was issued by the United States Patent and Trademark Office on March 6, 2018. The '312 Patent was originally assigned to DataStream Automotive, Inc. and was subsequently acquired by Pinnacle pursuant to an assignment recorded at the USPTO on August 14, 2023. The named inventor of the '312 Patent is Dr. Alan Prescott, who served as the Chief Technology Officer of DataStream Automotive, Inc. prior to that company's dissolution.

The '312 Patent has a statutory expiration date of September 12, 2035, calculated based on its twenty-year term from the provisional application priority date of September 12, 2015. There are no terminal disclaimers, patent term adjustments, or patent term extensions applicable to the '312 Patent. The patent therefore has more than ten years of remaining life, which is a relevant consideration in evaluating the scope and value of the covenant not to sue that is included in the proposed settlement.

Pinnacle asserts three independent claims of the '312 Patent: Claims 1, 7, and 14. The technology at issue generally relates to a method and system for aggregating OBD-II diagnostic data and GPS telemetry data from multiple vehicle sensors, compressing and encrypting the aggregated data packets, and transmitting those packets over cellular data connections at adaptive intervals that are dynamically adjusted based on measured network congestion metrics. The claims describe a framework for intelligently managing the frequency and content of data transmissions from connected vehicles to remote servers, with particular emphasis on the use of network congestion metrics as a feedback mechanism to optimize transmission scheduling.

2.2 Accused Products

Pinnacle's infringement allegations are directed at two VMS products:

(a) VMS DriveLink™ 4.0 Telematics Control Unit. The DriveLink™ 4.0 is a hardware telematics control unit ("TCU") that is installed in commercial fleet vehicles and is responsible for collecting and transmitting OBD-II diagnostic data and CAN-bus vehicle data to fleet operators via cellular data connections. The DriveLink™ 4.0 is VMS's flagship hardware product and represents a significant portion of the company's recurring revenue through hardware sales and associated data-service subscriptions.

(b) VMS FleetPulse™ Cloud Platform. FleetPulse™ is a cloud-based fleet management software platform that receives, processes, stores, and analyzes the transmitted vehicle data. FleetPulse™ provides fleet operators with real-time dashboards, predictive maintenance alerts, route optimization tools, and compliance reporting. Pinnacle alleges that FleetPulse™, in conjunction with the DriveLink™ 4.0 hardware, practices the asserted method claims of the '312 Patent.

The combination of these two products—the hardware TCU and the cloud platform—forms the core of VMS's connected-vehicle and fleet-management business. Accordingly, an adverse judgment at trial would have significant implications not only in terms of monetary damages but also potentially for ongoing product operations, depending on the scope of any injunctive relief that might be sought.

2.3 Procedural History

Pinnacle filed its Complaint on February 28, 2024, in the United States District Court for the Eastern District of Texas, marshall Division. The case was assigned to the Honorable J. Rodney Gilstrap, Chief Judge. VMS filed its Answer and Counterclaims on April 15, 2024, asserting defenses and counterclaims of invalidity under 35 U.S.C. §§ 102 and 103, non-infringement, and inequitable conduct during prosecution of the '312 Patent before the USPTO.

VMS was initially represented in this matter by Hargrove Dunn LLP, which handled the defense from the time of filing through the claim construction phase. Hargrove Dunn withdrew from the representation effective January 10, 2025, due to a conflict of interest arising from its representation of another client on a matter adverse to a Pinnacle affiliate. Calderwood & Harkness LLP assumed responsibility for VMS's defense on January 15, 2025. Caldwell Barrow LLP (lead attorney: Sandra Caldwell) serves as local counsel for VMS in the Eastern District of Texas, as required by the Local Rules of that court.

The Markman hearing on claim construction was held on November 14, 2024, and the Court entered its Claim Construction Order on December 19, 2024. A summary of the Claim Construction Order is enclosed as Enclosure 3. The Court's constructions were mixed in their effect on the parties' respective positions. The Court construed the terms "adaptive interval" and "aggregated data packet" in a manner favorable to VMS's non-infringement position—specifically, requiring that the "adaptive interval" be dynamically recalculated at each transmission cycle (rather than merely being adjustable at initialization) and that an "aggregated data packet" include data from at least three distinct sensor categories (rather than merely two). However, the Court's construction of the term "network congestion metric" was notably ambiguous, defining it broadly as "any quantitative measure of the data transmission load or capacity of a cellular network connection." This broad construction preserves a meaningful infringement risk for VMS, as the DriveLink™ 4.0 firmware does incorporate certain signal-strength and latency measurements that could arguably fall within the scope of "network congestion metric" as construed.

Fact discovery in the case closed on March 28, 2025. The original expert report deadline was set for May 30, 2025, and the original trial date was scheduled for October 6, 2025. Both of these dates will be vacated upon consummation of the settlement and the filing of a joint stipulation of dismissal.

2.4 Plaintiff's Counsel

Pinnacle is represented by Whitfield & Gaines PLLC, a Tyler, Texas-based firm with a significant patent litigation practice in the Eastern District of Texas. The lead partner on the matter is Nolan Whitfield, assisted by associate Priya Madan. Whitfield & Gaines represents Pinnacle on a thirty-five percent (35%) contingency-fee arrangement, which is consistent with typical fee structures in NPE patent assertion cases. The contingency-fee arrangement has been a relevant factor in settlement negotiations, as plaintiff's counsel has a direct financial interest in the recovery amount and has accordingly been motivated to reach a resolution that provides a sufficient return on their investment of time and litigation costs.

3. Defense Assessment and Risk Analysis

Upon assuming representation of VMS in January 2025, Calderwood & Harkness LLP conducted a thorough reassessment of the invalidity and non-infringement defenses in light of the Claim Construction Order and the state of the evidentiary record. As part of this effort, we retained Dr. Franklin Yeoh of Greystone Technical Consulting LLC, an Ann Arbor, Michigan-based consulting firm, as a technical expert to evaluate VMS's invalidity and non-infringement positions, prepare detailed claim charts, and draft invalidity contentions. Dr. Yeoh holds a Ph.D. in electrical engineering from the University of Michigan and has over twenty years of experience in automotive telematics and connected-vehicle technology. His expert opinion, while prepared in draft form and shared with counsel for litigation strategy purposes, was not formally filed with the Court due to the early settlement posture of the case. A summary of his assessment is included in the enclosed Invalidity and Non-Infringement Assessment Memorandum (Enclosure 4), which is privileged and confidential.

3.1 Invalidity Position

Our invalidity defense rests primarily on two prior art references:

(a) Tanaka et al., U.S. Patent No. 8,214,097 (issued July 3, 2012). The Tanaka patent discloses a system for OBD-II telemetry aggregation and cellular transmission from fleet vehicles to a central server. Tanaka describes the collection of diagnostic data from multiple vehicle sensors, the aggregation of that data into structured packets, and the periodic transmission of those packets over a cellular data network. We contend that Tanaka anticipates Claims 1 and 14 of the '312 Patent under 35 U.S.C. § 102, as it discloses each element of those claims as construed by the Court, including the aggregation of data from at least three sensor categories and the transmission of aggregated packets over cellular connections. The Tanaka reference was not cited during the prosecution of the '312 Patent, which may also support our inequitable conduct counterclaim if it can be demonstrated that the prosecuting attorney was aware of the reference.

(b) Morales, Published PCT Application WO 2014/036281 (published March 13, 2014). The Morales application describes a method for dynamically adjusting data transmission intervals for vehicle telematics systems based on cellular network load-balancing metrics. Morales explicitly teaches the concept of measuring network congestion and using that measurement to vary the timing of data transmissions—a concept that closely corresponds to the "adaptive interval" and "network congestion metric" limitations of Claim 7. We contend that Claim 7 would have been obvious under 35 U.S.C. § 103 in view of Tanaka in combination with Morales, as Morales supplies the adaptive-interval teaching that is arguably missing from Tanaka alone.

Based on Dr. Yeoh's analysis, we assess a 65–70% probability of successfully invalidating at least one of the three asserted independent claims at trial. This assessment accounts for the strength of the prior art, the likelihood that a jury would credit Dr. Yeoh's testimony, and the known tendencies of Eastern District of Texas juries, which have historically been somewhat more favorable to patentees than other jurisdictions.

3.2 Non-Infringement Position

The Claim Construction Order provides VMS with a solid foundation for its non-infringement defense with respect to two of the three key claim limitations. The Court's narrow constructions of "adaptive interval" (requiring dynamic recalculation at each transmission cycle) and "aggregated data packet" (requiring data from at least three distinct sensor categories) support strong arguments that the DriveLink™ 4.0, as currently designed and operated, does not literally infringe the asserted claims. Specifically, the DriveLink™ 4.0 uses a pre-configured transmission schedule with limited runtime adjustability, which arguably does not satisfy the "dynamically recalculated at each transmission cycle" requirement. Additionally, in certain standard configurations, the DriveLink™ 4.0 aggregates data from only two sensor categories (OBD-II and GPS), although premium configurations may incorporate accelerometer data as a third category.

However, the Court's broad and ambiguous construction of "network congestion metric" as "any quantitative measure of the data transmission load or capacity of a cellular network connection" creates residual infringement exposure. The DriveLink™ 4.0 firmware incorporates received signal strength indicator (RSSI) monitoring and round-trip latency measurements as part of its cellular connection management routines. These measurements could potentially be characterized as "network congestion metrics" under the Court's broad construction, and Pinnacle's infringement theory relies heavily on this characterization. The ambiguity in the construction leaves this issue as a question of fact for the jury, which introduces meaningful uncertainty.

Based on the overall non-infringement analysis, Dr. Yeoh and our litigation team assess a 55–60% probability of prevailing on non-infringement after the Markman ruling. While these odds are favorable, they are not sufficiently decisive to eliminate material trial risk.

3.3 Cost-to-Trial Analysis

We have prepared a detailed estimate of the additional fees and expenses that would be incurred to take this case through a jury trial, assuming the current October 6, 2025 trial date is maintained. The estimated cost range is $2.8 million to $3.4 million in additional fees and expenses. This estimate includes the following categories of anticipated expenditure:

• Preparation, filing, and defense of opening and rebuttal expert reports (damages, technical, and invalidity experts)

• Expert depositions (both VMS's experts and Pinnacle's experts)

• Daubert motion practice to exclude or limit Pinnacle's damages expert and/or technical expert testimony

• Pre-trial briefing, including motions in limine and trial briefs

• Trial preparation, including witness preparation, demonstrative exhibits, and jury consultant engagement

• A two-week jury trial in Tyler, Texas, including travel and accommodation costs for the trial team and VMS witnesses

• Post-trial motions practice, including anticipated motions for judgment as a matter of law, new trial, and remittitur

In addition to the direct financial costs, proceeding through trial would impose significant management distraction costs on VMS. Key engineering and product development personnel, including members of the team responsible for the DriveLink™ 4.0 and FleetPulse™ platforms, would be required to devote substantial time to trial preparation, deposition testimony, and trial testimony. This diversion of resources would be particularly burdensome given VMS's current product development roadmap and its planned launch of the DriveLink™ 5.0 platform in Q1 2026.

4. Proposed Settlement Terms

After extensive arms-length negotiations between counsel for the parties, VMS and Pinnacle have reached agreement in principle on the following material settlement terms, which are reflected in the draft Settlement Agreement and Mutual Release enclosed as Enclosure 2:

(a) Settlement Payment. VMS shall pay to Pinnacle a lump-sum settlement payment of three hundred eighty-five thousand dollars ($385,000). The payment is non-refundable and constitutes the entirety of the consideration to be paid by VMS under the settlement.

(b) Payment Deadline. The settlement payment shall be due and payable within thirty (30) calendar days after the full execution of the Settlement Agreement by both parties.

(c) Covenant Not to Sue. Pinnacle shall deliver to VMS a covenant not to sue, pursuant to which Pinnacle covenants and agrees not to assert, or cause to be asserted, any claim, action, or proceeding against VMS, its affiliates, subsidiaries, successors, assigns, customers, distributors, and end users, arising under or in connection with the '312 Patent and all other patents in the Pinnacle portfolio as of the effective date of the Settlement Agreement. This covenant provides VMS with broad protection against future patent assertions by Pinnacle and extends to VMS's downstream customer base, which is of particular commercial importance given VMS's business model of selling hardware and software solutions to fleet operators.

(d) Mutual General Releases. Each party shall execute mutual general releases of all claims, demands, causes of action, and liabilities arising from or related to the above-referenced litigation, the '312 Patent, and the parties' dealings with respect thereto.

(e) No License Grant. The settlement is structured as a covenant not to sue rather than a patent license. This structure was specifically requested by VMS for accounting and financial disclosure purposes, as it avoids the recognition of a license obligation on VMS's balance sheet and simplifies VMS's intellectual property reporting in connection with Fund IV's annual portfolio company disclosures.

(f) No Admission. The Settlement Agreement contains no admission of liability, infringement, or patent validity by either party. VMS expressly denies infringement and reserves all positions regarding the invalidity of the '312 Patent.

(g) Confidentiality. The settlement amount and the substantive terms of the Settlement Agreement are confidential. The parties may disclose the existence of the settlement (e.g., in connection with the filing of the stipulation of dismissal), but may not disclose the amount paid or the specific terms absent a court order, regulatory requirement, or mutual written consent.

(h) Dismissal. Within fourteen (14) days of confirmation of receipt of the settlement payment, the parties shall file a joint stipulation of dismissal with prejudice of all claims and counterclaims, with each party bearing its own attorneys' fees and costs.

(i) Attorneys' Fees and Costs. Each party shall bear its own attorneys' fees and costs incurred in connection with the litigation and the settlement.

5. Insurance Coverage and Funding Split

VMS maintains a Commercial General Liability insurance policy issued by Northbridge Specialty Insurance Company, Policy No. NSI-CGL-2024-08821 (the "Policy"). The Policy includes an intellectual Property Infringement Defense sublimit of five hundred thousand dollars ($500,000) per occurrence and one million dollars ($1,000,000) in the aggregate. The Policy provides coverage for both defense costs and indemnity payments arising from covered intellectual property infringement claims, subject to a self-insured retention ("SIR") of seventy-five thousand dollars ($75,000) per occurrence.

On February 12, 2025, Northbridge confirmed, through a coverage determination letter issued by its Senior Claims Examiner, Karen Dietrich, that the defense of the '312 Patent action is covered under the Policy, subject to the SIR and a standard reservation of rights. Northbridge has participated in settlement discussions and has approved the proposed settlement amount of $385,000 as within the covered range.

The settlement funding will be allocated as follows:

The $310,000 indemnity amount is well within the $500,000 per-occurrence sublimit, and there have been no prior claims against the intellectual Property Infringement Defense coverage under the Policy. Accordingly, the full $310,000 is available for payment without implicating the aggregate limit.

It is important to note that defense costs incurred by VMS during the Calderwood & Harkness engagement period, totaling $512,800 as detailed in Section 7 below, are borne by VMS outside the Policy sublimit. These defense costs are not part of the Northbridge indemnity obligation and do not erode the available coverage for the settlement payment. The defense cost structure under the Policy treats outside counsel fees and litigation expenses as the policyholder's responsibility, with the Policy's sublimit reserved for indemnity payments in connection with settlements or judgments.

6. Cost-Benefit Rationale and Recommendation

We recommend that VMS proceed with the proposed settlement for the following reasons, which we believe are compelling both individually and in the aggregate:

Nuisance-Value Resolution. The $385,000 settlement amount represents a nuisance-value resolution that is significantly below any reasonable damages model that Pinnacle could present at trial. Based on our review of Pinnacle's preliminary damages contentions (served during fact discovery), Pinnacle's damages expert was expected to seek a reasonable royalty in the range of $4.5 million to $7.2 million, based on an assumed royalty rate applied to VMS's DriveLink™ and FleetPulse™ revenues. Even applying aggressive discounting to Pinnacle's damages theory, the settlement amount of $385,000 represents a fraction—approximately 5 to 8.5 percent—of the low end of Pinnacle's anticipated trial demand.

Limited Out-of-Pocket Exposure. VMS's total out-of-pocket exposure under the settlement is limited to $75,000—the amount of the SIR. The remaining $310,000 is funded by Northbridge under the Policy's intellectual Property Infringement Defense sublimit. This represents an exceptionally favorable financial outcome for VMS as compared to the alternative of proceeding to trial.

Comparison to Cost-to-Trial. The estimated additional cost to take the case through trial is $2.8 million to $3.4 million in fees and expenses alone, on top of the $512,800 already incurred during the Calderwood & Harkness engagement period. The total litigation spend through trial would therefore range from approximately $3.3 million to $3.9 million in fees and costs (exclusive of any judgment or post-trial proceedings), compared to the total litigation spend under the settlement scenario of approximately $897,800. The settlement thus represents a savings of approximately $2.4 million to $3.0 million in avoided litigation costs.

Risk-Adjusted Expected Value. Even applying the most favorable defense probabilities—65–70% on invalidity and 55–60% on non-infringement—the risk-adjusted expected cost of proceeding to trial substantially exceeds the settlement amount. There remains a 30–35% probability that VMS would fail to invalidate the asserted claims and a 40–45% probability that VMS would be found to infringe. In a scenario where VMS loses on both invalidity and infringement, the damages exposure at trial could range from $4.5 million to $7.2 million based on Pinnacle's royalty theory, plus the possibility of enhanced damages under 35 U.S.C. § 284 and attorneys' fees under 35 U.S.C. § 285 (though the latter is unlikely in a case of this nature). The risk-adjusted expected cost of trial—incorporating both defense costs and potential adverse judgment—materially exceeds the $385,000 settlement amount under any reasonable probability weighting.

Breadth of the Covenant Not to Sue. The covenant-not-to-sue structure provides VMS with broad and enduring protection against future assertions by Pinnacle under the '312 Patent and the entirety of Pinnacle's current patent portfolio, which includes approximately thirty-five patents acquired from DataStream. This breadth of coverage is particularly valuable given that Pinnacle, as a non-practicing entity with a litigation-monetization business model, could otherwise seek to assert additional patents from its portfolio against VMS products in the future. The covenant extends to VMS's affiliates, successors, customers, and end users, providing comprehensive downstream protection.

Elimination of Management Distraction. Settlement eliminates the significant management distraction and operational disruption associated with trial preparation and a two-week jury trial. This is particularly important in light of VMS's ongoing product development activities and any future strategic transactions that Fund IV may be contemplating for the VMS portfolio company.

Concurrence of VMS Management. VMS's VP & Associate General Counsel, Rachel Nguyen, has reviewed the proposed settlement terms, the defense assessment, and the cost-benefit analysis, and concurs fully in the recommendation to settle on the terms described herein.

For all of the foregoing reasons, Calderwood & Harkness LLP strongly recommends that VMS accept the proposed settlement and that you, as the Ridgeline board designee, execute the enclosed Written Consent to authorize VMS to proceed.

7. Defense Costs Summary

For your information and records, we provide below a summary of the defense costs incurred during the Calderwood & Harkness LLP engagement period (January 15, 2025 through present):

Please note that approximately $624,000 in legal fees and expenses was incurred by prior defense counsel, Hargrove Dunn LLP, during its representation of VMS from the commencement of the litigation through January 10, 2025. Those costs are outside the scope of Calderwood & Harkness's billing and engagement, and are accordingly excluded from the figures presented above. The total lifetime litigation spend for this matter, inclusive of Hargrove Dunn's fees, is approximately $1,521,800 ($624,000 + $897,800).

8. Action Requested

We respectfully request that you, in your capacity as the Ridgeline board designee to the VMS Board of Directors, take the following actions at your earliest convenience:

1. Review the enclosed materials, including the form of Written Consent (Enclosure 1), the draft Settlement Agreement and Mutual Release (Enclosure 2), the Summary of Claim Construction Order (Enclosure 3), and the Invalidity and Non-Infringement Assessment Memorandum (Enclosure 4).

2. Execute the enclosed form of Written Consent authorizing VMS to enter into the Settlement Agreement on substantially the terms described herein and in the enclosed draft.

3. Return the executed Written Consent to the undersigned at Calderwood & Harkness LLP by email (mdelgado@calderwoodharkness.com) and by overnight courier to the address set forth below, at the earliest practicable date.

We note that the settlement counterproposal was transmitted by Calderwood & Harkness LLP to plaintiff's counsel, Whitfield & Gaines PLLC, on April 14, 2025, with a twenty-one (21) calendar-day expiration window. Although the parties have continued to negotiate in good faith, and Pinnacle's counsel has informally indicated a willingness to extend the response deadline, prompt execution and return of the Written Consent is requested so that we may finalize the settlement documentation and proceed to execution of the Settlement Agreement before the expiration or withdrawal of the proposal. Delay in obtaining the requisite consent may jeopardize the favorable terms currently on the table, particularly given the involvement of Arcadia Litigation Finance, LP as Pinnacle's litigation funder, which may impose its own timeline constraints.

We would be pleased to arrange a conference call with Marcus Delgado, Rachel Nguyen, and you at a mutually convenient time to discuss any questions you may have regarding the proposed settlement, the underlying litigation, or any other aspect of this matter. Please do not hesitate to contact the undersigned directly to schedule such a call.

9. Enclosures

The following materials are enclosed with this letter:

Enclosure 1: Form of Written Consent of Ridgeline Board Designee

Enclosure 2: Draft Settlement Agreement and Mutual Release (execution version)

Enclosure 3: Summary of Claim Construction Order (December 19, 2024)

Enclosure 4: Invalidity and Non-Infringement Assessment Memorandum (privileged and confidential; dated March 15, 2025)

We appreciate your prompt attention to this matter and look forward to your response.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Marcus Delgado Partner, intellectual Property

One Fountain Square, 11th Floor Detroit, MI 48226 Telephone: (313) 555-7218 Facsimile: (313) 555-7201

Email: mdelgado@calderwoodharkness.com

cc: Rachel Nguyen, VP & Associate General Counsel, Vantage Mobility Systems Corp.

cc: Catherine Bloom, Billing Partner, Calderwood & Harkness LLP

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL COMMUNICATION. This letter and its enclosures constitute a privileged and confidential attorney-client communication and may also contain information protected by the work product doctrine. This communication is intended solely for the use of the addressee and the individuals identified in the copy lines above. This letter and its enclosures are not to be disclosed, copied, distributed, or otherwise disseminated to any third party without the prior written consent of Vantage Mobility Systems Corp. and its counsel, Calderwood & Harkness LLP. If you have received this communication in error, please notify the sender immediately and destroy all copies.

Component	Amount
VMS Self-Insured Retention (SIR)	$75,000
Northbridge Indemnity Portion	$310,000
Total Settlement Payment	$385,000
Vendor / Service Provider	Description	Amount
Calderwood & Harkness LLP	Legal fees (defense counsel)	$412,600
Caldwell Barrow LLP	Local counsel fees (E.D. Tex.)	$18,200
Greystone Technical Consulting LLC	Expert fees (Dr. Franklin Yeoh)	$47,750
Meridian Document Solutions LLC	E-discovery hosting and processing	$31,400
Court costs and filing fees	Miscellaneous court costs	$2,850
Total Defense Costs (C&H Period)	$512,800
Category	Amount
Total defense costs (C&H engagement period)	$512,800
Settlement payment	$385,000
Grand total litigation spend (C&H period)	$897,800
VMS Out-of-Pocket Summary	Amount
Defense costs (C&H period, borne by VMS)	$512,800
VMS SIR portion of settlement payment	$75,000
Total VMS out-of-pocket	$587,800

CALDERWOOD & HARKNESS LLP Attorneys at Law
One Fountain Square, 11th Floor Detroit, MI 48226 Telephone: (313) 555-7200 Facsimile: (313) 555-7201 www.calderwoodharkness.com
May 15, 2025
VIA EMAIL AND OVERNIGHT COURIER
David Mercer, Partner Ridgeline Capital Management, LLC 600 Lexington Avenue, 32nd Floor New York, NY 10022
Re: Request for Written Consent to Authorize Settlement — Pinnacle Innovations LLC v. Vantage Mobility Systems Corp., No. 2:24-cv-00187-JRG (E.D. Tex.)
Reference: VMS Operating Agreement § 7.04(c) — Required Board-Designee Consent
Calderwood & Harkness LLP Matter No. 1007-00003
Dear Mr. Mercer:
1. Purpose and Authority
Calderwood & Harkness LLP represents Vantage Mobility Systems Corp. ("VMS"), a Delaware corporation headquartered at 4200 Innovation Drive, Auburn Hills, Michigan 48326, in the above-referenced patent infringement action pending before the United States District Court for the Eastern District of Texas. As you are aware, VMS is a portfolio company of Ridgeline Capital Partners Fund IV, LP ("Fund IV"), which has served as the majority equity holder of VMS since the 2019 recapitalization transaction. Fund IV currently holds approximately 62% of VMS's outstanding equity, and Ridgeline Capital Management, LLC ("Ridgeline") serves as the general partner and investment manager of Fund IV.
We write to you on behalf of VMS and its VP & Associate General Counsel, Rachel Nguyen, to request your written consent, in your capacity as the Ridgeline board designee to the VMS Board of Directors, to authorize VMS to enter into a proposed settlement of the above-referenced litigation. As described more fully below, Section 7.04(c) of the Amended and Restated Operating Agreement of Vantage Mobility Systems Corp., dated as of October 1, 2019 (the "Operating Agreement"), provides that any single litigation expenditure or settlement in excess of two hundred fifty thousand dollars ($250,000) requires the prior written consent of the Ridgeline board designee. The proposed settlement calls for a lump-sum payment of three hundred eighty-five thousand dollars ($385,000), which exceeds the $250,000 threshold specified in Section 7.04(c) and therefore triggers the consent requirement.
Accordingly, a form of Written Consent is enclosed herewith as Enclosure 1 for your review, execution, and return. The purpose of this letter is to provide you with a comprehensive summary of the litigation background, our defense assessment and risk analysis, the proposed settlement terms, the insurance coverage and funding structure, and our cost-benefit rationale supporting the recommendation to settle. We believe, and Ms. Nguyen concurs, that the proposed settlement represents a favorable and prudent resolution for VMS and its stakeholders.
2. Litigation Background
2.1 The Parties and the Asserted Patent
The plaintiff in this action, Pinnacle Innovations LLC ("Pinnacle"), is a Texas limited liability company and a non-practicing entity ("NPE") that holds a portfolio of approximately thirty-five (35) United States patents acquired from DataStream Automotive, Inc. ("DataStream"), a defunct Illinois corporation that was dissolved in 2021. Pinnacle is managed by Grayson Holt and does not manufacture, sell, or otherwise commercialize any products or services. Pinnacle's litigation activities are financed by Arcadia Litigation Finance, LP, a Delaware limited partnership specializing in patent monetization and assertion campaigns. The involvement of a professional litigation funder is consistent with the broader pattern of NPE assertion strategies in the Eastern District of Texas and informs both the risk profile and the settlement dynamics of this case.
Pinnacle asserts a single patent in this action: U.S. Patent No. 9,847,312 B2 (the "'312 Patent"), titled "System and Method for Aggregated Vehicle Telemetry Data Transmission Over Cellular Networks," which was issued by the United States Patent and Trademark Office on March 6, 2018. The '312 Patent was originally assigned to DataStream Automotive, Inc. and was subsequently acquired by Pinnacle pursuant to an assignment recorded at the USPTO on August 14, 2023. The named inventor of the '312 Patent is Dr. Alan Prescott, who served as the Chief Technology Officer of DataStream Automotive, Inc. prior to that company's dissolution.
The '312 Patent has a statutory expiration date of September 12, 2035, calculated based on its twenty-year term from the provisional application priority date of September 12, 2015. There are no terminal disclaimers, patent term adjustments, or patent term extensions applicable to the '312 Patent. The patent therefore has more than ten years of remaining life, which is a relevant consideration in evaluating the scope and value of the covenant not to sue that is included in the proposed settlement.
Pinnacle asserts three independent claims of the '312 Patent: Claims 1, 7, and 14. The technology at issue generally relates to a method and system for aggregating OBD-II diagnostic data and GPS telemetry data from multiple vehicle sensors, compressing and encrypting the aggregated data packets, and transmitting those packets over cellular data connections at adaptive intervals that are dynamically adjusted based on measured network congestion metrics. The claims describe a framework for intelligently managing the frequency and content of data transmissions from connected vehicles to remote servers, with particular emphasis on the use of network congestion metrics as a feedback mechanism to optimize transmission scheduling.
2.2 Accused Products
Pinnacle's infringement allegations are directed at two VMS products:
(a) VMS DriveLink™ 4.0 Telematics Control Unit. The DriveLink™ 4.0 is a hardware telematics control unit ("TCU") that is installed in commercial fleet vehicles and is responsible for collecting and transmitting OBD-II diagnostic data and CAN-bus vehicle data to fleet operators via cellular data connections. The DriveLink™ 4.0 is VMS's flagship hardware product and represents a significant portion of the company's recurring revenue through hardware sales and associated data-service subscriptions.
(b) VMS FleetPulse™ Cloud Platform. FleetPulse™ is a cloud-based fleet management software platform that receives, processes, stores, and analyzes the transmitted vehicle data. FleetPulse™ provides fleet operators with real-time dashboards, predictive maintenance alerts, route optimization tools, and compliance reporting. Pinnacle alleges that FleetPulse™, in conjunction with the DriveLink™ 4.0 hardware, practices the asserted method claims of the '312 Patent.
The combination of these two products—the hardware TCU and the cloud platform—forms the core of VMS's connected-vehicle and fleet-management business. Accordingly, an adverse judgment at trial would have significant implications not only in terms of monetary damages but also potentially for ongoing product operations, depending on the scope of any injunctive relief that might be sought.
2.3 Procedural History
Pinnacle filed its Complaint on February 28, 2024, in the United States District Court for the Eastern District of Texas, marshall Division. The case was assigned to the Honorable J. Rodney Gilstrap, Chief Judge. VMS filed its Answer and Counterclaims on April 15, 2024, asserting defenses and counterclaims of invalidity under 35 U.S.C. §§ 102 and 103, non-infringement, and inequitable conduct during prosecution of the '312 Patent before the USPTO.
VMS was initially represented in this matter by Hargrove Dunn LLP, which handled the defense from the time of filing through the claim construction phase. Hargrove Dunn withdrew from the representation effective January 10, 2025, due to a conflict of interest arising from its representation of another client on a matter adverse to a Pinnacle affiliate. Calderwood & Harkness LLP assumed responsibility for VMS's defense on January 15, 2025. Caldwell Barrow LLP (lead attorney: Sandra Caldwell) serves as local counsel for VMS in the Eastern District of Texas, as required by the Local Rules of that court.
The Markman hearing on claim construction was held on November 14, 2024, and the Court entered its Claim Construction Order on December 19, 2024. A summary of the Claim Construction Order is enclosed as Enclosure 3. The Court's constructions were mixed in their effect on the parties' respective positions. The Court construed the terms "adaptive interval" and "aggregated data packet" in a manner favorable to VMS's non-infringement position—specifically, requiring that the "adaptive interval" be dynamically recalculated at each transmission cycle (rather than merely being adjustable at initialization) and that an "aggregated data packet" include data from at least three distinct sensor categories (rather than merely two). However, the Court's construction of the term "network congestion metric" was notably ambiguous, defining it broadly as "any quantitative measure of the data transmission load or capacity of a cellular network connection." This broad construction preserves a meaningful infringement risk for VMS, as the DriveLink™ 4.0 firmware does incorporate certain signal-strength and latency measurements that could arguably fall within the scope of "network congestion metric" as construed.
Fact discovery in the case closed on March 28, 2025. The original expert report deadline was set for May 30, 2025, and the original trial date was scheduled for October 6, 2025. Both of these dates will be vacated upon consummation of the settlement and the filing of a joint stipulation of dismissal.
2.4 Plaintiff's Counsel
Pinnacle is represented by Whitfield & Gaines PLLC, a Tyler, Texas-based firm with a significant patent litigation practice in the Eastern District of Texas. The lead partner on the matter is Nolan Whitfield, assisted by associate Priya Madan. Whitfield & Gaines represents Pinnacle on a thirty-five percent (35%) contingency-fee arrangement, which is consistent with typical fee structures in NPE patent assertion cases. The contingency-fee arrangement has been a relevant factor in settlement negotiations, as plaintiff's counsel has a direct financial interest in the recovery amount and has accordingly been motivated to reach a resolution that provides a sufficient return on their investment of time and litigation costs.
3. Defense Assessment and Risk Analysis
Upon assuming representation of VMS in January 2025, Calderwood & Harkness LLP conducted a thorough reassessment of the invalidity and non-infringement defenses in light of the Claim Construction Order and the state of the evidentiary record. As part of this effort, we retained Dr. Franklin Yeoh of Greystone Technical Consulting LLC, an Ann Arbor, Michigan-based consulting firm, as a technical expert to evaluate VMS's invalidity and non-infringement positions, prepare detailed claim charts, and draft invalidity contentions. Dr. Yeoh holds a Ph.D. in electrical engineering from the University of Michigan and has over twenty years of experience in automotive telematics and connected-vehicle technology. His expert opinion, while prepared in draft form and shared with counsel for litigation strategy purposes, was not formally filed with the Court due to the early settlement posture of the case. A summary of his assessment is included in the enclosed Invalidity and Non-Infringement Assessment Memorandum (Enclosure 4), which is privileged and confidential.
3.1 Invalidity Position
Our invalidity defense rests primarily on two prior art references:
(a) Tanaka et al., U.S. Patent No. 8,214,097 (issued July 3, 2012). The Tanaka patent discloses a system for OBD-II telemetry aggregation and cellular transmission from fleet vehicles to a central server. Tanaka describes the collection of diagnostic data from multiple vehicle sensors, the aggregation of that data into structured packets, and the periodic transmission of those packets over a cellular data network. We contend that Tanaka anticipates Claims 1 and 14 of the '312 Patent under 35 U.S.C. § 102, as it discloses each element of those claims as construed by the Court, including the aggregation of data from at least three sensor categories and the transmission of aggregated packets over cellular connections. The Tanaka reference was not cited during the prosecution of the '312 Patent, which may also support our inequitable conduct counterclaim if it can be demonstrated that the prosecuting attorney was aware of the reference.
(b) Morales, Published PCT Application WO 2014/036281 (published March 13, 2014). The Morales application describes a method for dynamically adjusting data transmission intervals for vehicle telematics systems based on cellular network load-balancing metrics. Morales explicitly teaches the concept of measuring network congestion and using that measurement to vary the timing of data transmissions—a concept that closely corresponds to the "adaptive interval" and "network congestion metric" limitations of Claim 7. We contend that Claim 7 would have been obvious under 35 U.S.C. § 103 in view of Tanaka in combination with Morales, as Morales supplies the adaptive-interval teaching that is arguably missing from Tanaka alone.
Based on Dr. Yeoh's analysis, we assess a 65–70% probability of successfully invalidating at least one of the three asserted independent claims at trial. This assessment accounts for the strength of the prior art, the likelihood that a jury would credit Dr. Yeoh's testimony, and the known tendencies of Eastern District of Texas juries, which have historically been somewhat more favorable to patentees than other jurisdictions.
3.2 Non-Infringement Position
The Claim Construction Order provides VMS with a solid foundation for its non-infringement defense with respect to two of the three key claim limitations. The Court's narrow constructions of "adaptive interval" (requiring dynamic recalculation at each transmission cycle) and "aggregated data packet" (requiring data from at least three distinct sensor categories) support strong arguments that the DriveLink™ 4.0, as currently designed and operated, does not literally infringe the asserted claims. Specifically, the DriveLink™ 4.0 uses a pre-configured transmission schedule with limited runtime adjustability, which arguably does not satisfy the "dynamically recalculated at each transmission cycle" requirement. Additionally, in certain standard configurations, the DriveLink™ 4.0 aggregates data from only two sensor categories (OBD-II and GPS), although premium configurations may incorporate accelerometer data as a third category.
However, the Court's broad and ambiguous construction of "network congestion metric" as "any quantitative measure of the data transmission load or capacity of a cellular network connection" creates residual infringement exposure. The DriveLink™ 4.0 firmware incorporates received signal strength indicator (RSSI) monitoring and round-trip latency measurements as part of its cellular connection management routines. These measurements could potentially be characterized as "network congestion metrics" under the Court's broad construction, and Pinnacle's infringement theory relies heavily on this characterization. The ambiguity in the construction leaves this issue as a question of fact for the jury, which introduces meaningful uncertainty.
Based on the overall non-infringement analysis, Dr. Yeoh and our litigation team assess a 55–60% probability of prevailing on non-infringement after the Markman ruling. While these odds are favorable, they are not sufficiently decisive to eliminate material trial risk.
3.3 Cost-to-Trial Analysis
We have prepared a detailed estimate of the additional fees and expenses that would be incurred to take this case through a jury trial, assuming the current October 6, 2025 trial date is maintained. The estimated cost range is $2.8 million to $3.4 million in additional fees and expenses. This estimate includes the following categories of anticipated expenditure:
• Preparation, filing, and defense of opening and rebuttal expert reports (damages, technical, and invalidity experts)
• Expert depositions (both VMS's experts and Pinnacle's experts)
• Daubert motion practice to exclude or limit Pinnacle's damages expert and/or technical expert testimony
• Pre-trial briefing, including motions in limine and trial briefs
• Trial preparation, including witness preparation, demonstrative exhibits, and jury consultant engagement
• A two-week jury trial in Tyler, Texas, including travel and accommodation costs for the trial team and VMS witnesses
• Post-trial motions practice, including anticipated motions for judgment as a matter of law, new trial, and remittitur
In addition to the direct financial costs, proceeding through trial would impose significant management distraction costs on VMS. Key engineering and product development personnel, including members of the team responsible for the DriveLink™ 4.0 and FleetPulse™ platforms, would be required to devote substantial time to trial preparation, deposition testimony, and trial testimony. This diversion of resources would be particularly burdensome given VMS's current product development roadmap and its planned launch of the DriveLink™ 5.0 platform in Q1 2026.
4. Proposed Settlement Terms
After extensive arms-length negotiations between counsel for the parties, VMS and Pinnacle have reached agreement in principle on the following material settlement terms, which are reflected in the draft Settlement Agreement and Mutual Release enclosed as Enclosure 2:
(a) Settlement Payment. VMS shall pay to Pinnacle a lump-sum settlement payment of three hundred eighty-five thousand dollars ($385,000). The payment is non-refundable and constitutes the entirety of the consideration to be paid by VMS under the settlement.
(b) Payment Deadline. The settlement payment shall be due and payable within thirty (30) calendar days after the full execution of the Settlement Agreement by both parties.
(c) Covenant Not to Sue. Pinnacle shall deliver to VMS a covenant not to sue, pursuant to which Pinnacle covenants and agrees not to assert, or cause to be asserted, any claim, action, or proceeding against VMS, its affiliates, subsidiaries, successors, assigns, customers, distributors, and end users, arising under or in connection with the '312 Patent and all other patents in the Pinnacle portfolio as of the effective date of the Settlement Agreement. This covenant provides VMS with broad protection against future patent assertions by Pinnacle and extends to VMS's downstream customer base, which is of particular commercial importance given VMS's business model of selling hardware and software solutions to fleet operators.
(d) Mutual General Releases. Each party shall execute mutual general releases of all claims, demands, causes of action, and liabilities arising from or related to the above-referenced litigation, the '312 Patent, and the parties' dealings with respect thereto.
(e) No License Grant. The settlement is structured as a covenant not to sue rather than a patent license. This structure was specifically requested by VMS for accounting and financial disclosure purposes, as it avoids the recognition of a license obligation on VMS's balance sheet and simplifies VMS's intellectual property reporting in connection with Fund IV's annual portfolio company disclosures.
(f) No Admission. The Settlement Agreement contains no admission of liability, infringement, or patent validity by either party. VMS expressly denies infringement and reserves all positions regarding the invalidity of the '312 Patent.
(g) Confidentiality. The settlement amount and the substantive terms of the Settlement Agreement are confidential. The parties may disclose the existence of the settlement (e.g., in connection with the filing of the stipulation of dismissal), but may not disclose the amount paid or the specific terms absent a court order, regulatory requirement, or mutual written consent.
(h) Dismissal. Within fourteen (14) days of confirmation of receipt of the settlement payment, the parties shall file a joint stipulation of dismissal with prejudice of all claims and counterclaims, with each party bearing its own attorneys' fees and costs.
(i) Attorneys' Fees and Costs. Each party shall bear its own attorneys' fees and costs incurred in connection with the litigation and the settlement.
5. Insurance Coverage and Funding Split
VMS maintains a Commercial General Liability insurance policy issued by Northbridge Specialty Insurance Company, Policy No. NSI-CGL-2024-08821 (the "Policy"). The Policy includes an intellectual Property Infringement Defense sublimit of five hundred thousand dollars ($500,000) per occurrence and one million dollars ($1,000,000) in the aggregate. The Policy provides coverage for both defense costs and indemnity payments arising from covered intellectual property infringement claims, subject to a self-insured retention ("SIR") of seventy-five thousand dollars ($75,000) per occurrence.
On February 12, 2025, Northbridge confirmed, through a coverage determination letter issued by its Senior Claims Examiner, Karen Dietrich, that the defense of the '312 Patent action is covered under the Policy, subject to the SIR and a standard reservation of rights. Northbridge has participated in settlement discussions and has approved the proposed settlement amount of $385,000 as within the covered range.
The settlement funding will be allocated as follows:
The $310,000 indemnity amount is well within the $500,000 per-occurrence sublimit, and there have been no prior claims against the intellectual Property Infringement Defense coverage under the Policy. Accordingly, the full $310,000 is available for payment without implicating the aggregate limit.
It is important to note that defense costs incurred by VMS during the Calderwood & Harkness engagement period, totaling $512,800 as detailed in Section 7 below, are borne by VMS outside the Policy sublimit. These defense costs are not part of the Northbridge indemnity obligation and do not erode the available coverage for the settlement payment. The defense cost structure under the Policy treats outside counsel fees and litigation expenses as the policyholder's responsibility, with the Policy's sublimit reserved for indemnity payments in connection with settlements or judgments.
6. Cost-Benefit Rationale and Recommendation
We recommend that VMS proceed with the proposed settlement for the following reasons, which we believe are compelling both individually and in the aggregate:
Nuisance-Value Resolution. The $385,000 settlement amount represents a nuisance-value resolution that is significantly below any reasonable damages model that Pinnacle could present at trial. Based on our review of Pinnacle's preliminary damages contentions (served during fact discovery), Pinnacle's damages expert was expected to seek a reasonable royalty in the range of $4.5 million to $7.2 million, based on an assumed royalty rate applied to VMS's DriveLink™ and FleetPulse™ revenues. Even applying aggressive discounting to Pinnacle's damages theory, the settlement amount of $385,000 represents a fraction—approximately 5 to 8.5 percent—of the low end of Pinnacle's anticipated trial demand.
Limited Out-of-Pocket Exposure. VMS's total out-of-pocket exposure under the settlement is limited to $75,000—the amount of the SIR. The remaining $310,000 is funded by Northbridge under the Policy's intellectual Property Infringement Defense sublimit. This represents an exceptionally favorable financial outcome for VMS as compared to the alternative of proceeding to trial.
Comparison to Cost-to-Trial. The estimated additional cost to take the case through trial is $2.8 million to $3.4 million in fees and expenses alone, on top of the $512,800 already incurred during the Calderwood & Harkness engagement period. The total litigation spend through trial would therefore range from approximately $3.3 million to $3.9 million in fees and costs (exclusive of any judgment or post-trial proceedings), compared to the total litigation spend under the settlement scenario of approximately $897,800. The settlement thus represents a savings of approximately $2.4 million to $3.0 million in avoided litigation costs.
Risk-Adjusted Expected Value. Even applying the most favorable defense probabilities—65–70% on invalidity and 55–60% on non-infringement—the risk-adjusted expected cost of proceeding to trial substantially exceeds the settlement amount. There remains a 30–35% probability that VMS would fail to invalidate the asserted claims and a 40–45% probability that VMS would be found to infringe. In a scenario where VMS loses on both invalidity and infringement, the damages exposure at trial could range from $4.5 million to $7.2 million based on Pinnacle's royalty theory, plus the possibility of enhanced damages under 35 U.S.C. § 284 and attorneys' fees under 35 U.S.C. § 285 (though the latter is unlikely in a case of this nature). The risk-adjusted expected cost of trial—incorporating both defense costs and potential adverse judgment—materially exceeds the $385,000 settlement amount under any reasonable probability weighting.
Breadth of the Covenant Not to Sue. The covenant-not-to-sue structure provides VMS with broad and enduring protection against future assertions by Pinnacle under the '312 Patent and the entirety of Pinnacle's current patent portfolio, which includes approximately thirty-five patents acquired from DataStream. This breadth of coverage is particularly valuable given that Pinnacle, as a non-practicing entity with a litigation-monetization business model, could otherwise seek to assert additional patents from its portfolio against VMS products in the future. The covenant extends to VMS's affiliates, successors, customers, and end users, providing comprehensive downstream protection.
Elimination of Management Distraction. Settlement eliminates the significant management distraction and operational disruption associated with trial preparation and a two-week jury trial. This is particularly important in light of VMS's ongoing product development activities and any future strategic transactions that Fund IV may be contemplating for the VMS portfolio company.
Concurrence of VMS Management. VMS's VP & Associate General Counsel, Rachel Nguyen, has reviewed the proposed settlement terms, the defense assessment, and the cost-benefit analysis, and concurs fully in the recommendation to settle on the terms described herein.
For all of the foregoing reasons, Calderwood & Harkness LLP strongly recommends that VMS accept the proposed settlement and that you, as the Ridgeline board designee, execute the enclosed Written Consent to authorize VMS to proceed.
7. Defense Costs Summary
For your information and records, we provide below a summary of the defense costs incurred during the Calderwood & Harkness LLP engagement period (January 15, 2025 through present):
Please note that approximately $624,000 in legal fees and expenses was incurred by prior defense counsel, Hargrove Dunn LLP, during its representation of VMS from the commencement of the litigation through January 10, 2025. Those costs are outside the scope of Calderwood & Harkness's billing and engagement, and are accordingly excluded from the figures presented above. The total lifetime litigation spend for this matter, inclusive of Hargrove Dunn's fees, is approximately $1,521,800 ($624,000 + $897,800).
8. Action Requested
We respectfully request that you, in your capacity as the Ridgeline board designee to the VMS Board of Directors, take the following actions at your earliest convenience:
1. Review the enclosed materials, including the form of Written Consent (Enclosure 1), the draft Settlement Agreement and Mutual Release (Enclosure 2), the Summary of Claim Construction Order (Enclosure 3), and the Invalidity and Non-Infringement Assessment Memorandum (Enclosure 4).
2. Execute the enclosed form of Written Consent authorizing VMS to enter into the Settlement Agreement on substantially the terms described herein and in the enclosed draft.
3. Return the executed Written Consent to the undersigned at Calderwood & Harkness LLP by email (mdelgado@calderwoodharkness.com) and by overnight courier to the address set forth below, at the earliest practicable date.
We note that the settlement counterproposal was transmitted by Calderwood & Harkness LLP to plaintiff's counsel, Whitfield & Gaines PLLC, on April 14, 2025, with a twenty-one (21) calendar-day expiration window. Although the parties have continued to negotiate in good faith, and Pinnacle's counsel has informally indicated a willingness to extend the response deadline, prompt execution and return of the Written Consent is requested so that we may finalize the settlement documentation and proceed to execution of the Settlement Agreement before the expiration or withdrawal of the proposal. Delay in obtaining the requisite consent may jeopardize the favorable terms currently on the table, particularly given the involvement of Arcadia Litigation Finance, LP as Pinnacle's litigation funder, which may impose its own timeline constraints.
We would be pleased to arrange a conference call with Marcus Delgado, Rachel Nguyen, and you at a mutually convenient time to discuss any questions you may have regarding the proposed settlement, the underlying litigation, or any other aspect of this matter. Please do not hesitate to contact the undersigned directly to schedule such a call.
9. Enclosures
The following materials are enclosed with this letter:
Enclosure 1: Form of Written Consent of Ridgeline Board Designee
Enclosure 2: Draft Settlement Agreement and Mutual Release (execution version)
Enclosure 3: Summary of Claim Construction Order (December 19, 2024)
Enclosure 4: Invalidity and Non-Infringement Assessment Memorandum (privileged and confidential; dated March 15, 2025)
We appreciate your prompt attention to this matter and look forward to your response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Marcus Delgado Partner, intellectual Property
One Fountain Square, 11th Floor Detroit, MI 48226 Telephone: (313) 555-7218 Facsimile: (313) 555-7201
Email: mdelgado@calderwoodharkness.com
cc: Rachel Nguyen, VP & Associate General Counsel, Vantage Mobility Systems Corp.
cc: Catherine Bloom, Billing Partner, Calderwood & Harkness LLP
ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL COMMUNICATION. This letter and its enclosures constitute a privileged and confidential attorney-client communication and may also contain information protected by the work product doctrine. This communication is intended solely for the use of the addressee and the individuals identified in the copy lines above. This letter and its enclosures are not to be disclosed, copied, distributed, or otherwise disseminated to any third party without the prior written consent of Vantage Mobility Systems Corp. and its counsel, Calderwood & Harkness LLP. If you have received this communication in error, please notify the sender immediately and destroy all copies.
Component | Amount
VMS Self-Insured Retention (SIR) | $75,000
Northbridge Indemnity Portion | $310,000
Total Settlement Payment | $385,000
Vendor / Service Provider | Description | Amount
Calderwood & Harkness LLP | Legal fees (defense counsel) | $412,600
Caldwell Barrow LLP | Local counsel fees (E.D. Tex.) | $18,200
Greystone Technical Consulting LLC | Expert fees (Dr. Franklin Yeoh) | $47,750
Meridian Document Solutions LLC | E-discovery hosting and processing | $31,400
Court costs and filing fees | Miscellaneous court costs | $2,850
Total Defense Costs (C&H Period) | $512,800
Category | Amount
Total defense costs (C&H engagement period) | $512,800
Settlement payment | $385,000
Grand total litigation spend (C&H period) | $897,800
VMS Out-of-Pocket Summary | Amount
Defense costs (C&H period, borne by VMS) | $512,800
VMS SIR portion of settlement payment | $75,000
Total VMS out-of-pocket | $587,800

CALDERWOOD & HARKNESS LLP Attorneys at Law

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