MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
TO:
Harrison Wexford, Responsible Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Derek Okonkwo, Lead Associate, Mergers & Acquisitions, Calderwood & Harkness LLP
Elena Vasquez-Bright, General Counsel, Cascade Retail Holdings Inc.
Theodore ("Ted") Langford, SVP, Corporate Development, Cascade Retail Holdings Inc.
FROM:
Tiffany Rosenthal, Working Associate, Mergers & Acquisitions, Calderwood & Harkness LLP
DATE: March 31, 2025
RE: intellectual Property Due Diligence Summary — NovaMart Global Inc. (Project NovaMart)
MATTER: Cascade Retail Holdings Inc. — Proposed Acquisition of NovaMart Global Inc.
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I. EXECUTIVE SUMMARY
The purpose of this memorandum is to summarize the findings of the intellectual property due diligence review of NovaMart Global Inc. ("NovaMart" or "NMG"), a Delaware corporation headquartered at 1100 Congress Avenue, Suite 800, Austin, Texas 78701, conducted in connection with the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade" or "CRH") of one hundred percent (100%) of NovaMart's outstanding capital stock for an aggregate purchase price of $1,200,000,000 (the "Transaction"). The Transaction is to be structured as a stock purchase and will be effected pursuant to a Stock Purchase Agreement (the "SPA") currently under negotiation between the parties and their respective counsel.
Intellectual property due diligence commenced on February 18, 2025. Materials reviewed in connection with this memorandum were sourced from NovaMart's virtual data room (the "Data Room"), hosted on Thackeray Solutions, as well as supplemental document requests served on NovaMart's outside counsel, Calloway, Brandt & Loewe LLP (Richard Calloway, lead partner; Simone Adesanya, associate lead), dated March 5, 2025, and March 18, 2025, respectively. In addition, we conducted management interviews with Priya Narasimhan, Co-Founder and Chief Technology Officer, and Amanda Trevino, General Counsel, of NovaMart, on March 12, 2025, and March 21, 2025.
NovaMart operates one of the largest independent U.S. online marketplace platforms for specialty consumer goods, home décor, artisanal products, and consumer electronics accessories. As of the end of fiscal year 2024, the NovaMart platform hosted approximately 62,400 active sellers and approximately 9.1 million registered buyers, with fiscal year 2024 gross merchandise value ("GMV") of approximately $6.2 billion. NovaMart also operates a proprietary logistics network branded "NovaShip," which encompasses fourteen (14) fulfillment centers across nine (9) states: California (3), New Jersey (2), Georgia (2), Ohio (1), Illinois (1), Pennsylvania (1), Tennessee (1), Florida (2), and Washington (1).
Overall Assessment. NovaMart possesses a substantial intellectual property portfolio consisting of patents, trademarks, copyrights, domain names, trade secrets, and technology licenses. The IP portfolio is generally well-maintained and ownership documentation is largely in order. Several items require further attention as detailed in this memorandum, but no issues have been identified that would be transaction-blocking. The areas flagged for further attention are manageable through a combination of consent solicitations, SPA representations and warranties, disclosure schedule entries, and post-closing remediation.
Key Flagged Items requiring attention include the following:
(a) The Technology License Agreement between NovaMart and Arcwave Software LLC contains a change of control provision requiring the prior written consent of Arcwave to any assignment or change of control of the licensee. This consent must be obtained prior to or at closing.
(b) NovaMart's usage of open-source software components, including one component licensed under the GNU Affero General Public License v3 ("AGPL v3"), requires confirmation of compliance with copyleft license obligations. NovaMart's open-source compliance program is relatively informal and has not utilized automated scanning tools.
(c) Certain patent applications remain pending before the United States Patent and Trademark Office ("USPTO") and may not ultimately issue. The strategic importance of these pending applications to Cascade's post-closing technology roadmap should be assessed.
(d) Trademark prosecution in certain international jurisdictions (Canada, the European Union, and the United Kingdom) is incomplete, and NovaMart's international trademark coverage is limited. If Cascade intends to pursue international expansion of the NovaMart marketplace, a comprehensive international trademark filing strategy should be developed post-closing.
Each of these items, along with additional observations and recommendations, is discussed in detail in the sections that follow.
II. SCOPE OF REVIEW
A. Categories of Materials Reviewed
The following categories of intellectual property-related materials were reviewed in connection with this due diligence analysis:
1. Patent Portfolio — Issued U.S. utility patents and pending U.S. patent applications, including prosecution files, assignment records, and maintenance fee records.
2. Trademark Registrations and Applications — U.S. and international trademark registrations and pending applications, including prosecution files, specimens of use, maintenance filings, and renewal records.
3. Copyright Registrations — Formal U.S. Copyright Office registrations for key software works and other copyrightable materials.
4. Domain Name Portfolio — Domain name registrations, registrar records, renewal dates, and WHOIS information.
5. Trade Secret Inventory and Protection Measures — Internal trade secret identification documents, data classification policies, access control documentation, and information security policies.
6. Open-Source Software Audit Reports — NovaMart's internal open-source software component inventory and compliance documentation prepared in Q3 2024.
7. Inbound IP Licenses — All agreements pursuant to which NovaMart is the licensee of third-party intellectual property, including technology license agreements, software-as-a-service agreements, and data access agreements.
8. Outbound IP Licenses — All agreements pursuant to which NovaMart grants licenses or access rights to its intellectual property to third parties, including marketplace Terms of Service, seller and buyer platform agreements, and advertising data access agreements.
9. IP-Related Litigation History — Records of any past or pending litigation, disputes, cease-and-desist letters, or demands related to intellectual property, including patent, trademark, copyright, and trade secret matters.
10. Employee and Contractor IP Assignment Agreements — Proprietary Information and Inventions Assignment Agreements ("PIIAs") executed by employees, independent contractor agreements containing IP assignment provisions, and founding IP assignment agreements executed by NovaMart's founders.
11. IP Representations in Existing Commercial Agreements — Representations and warranties relating to intellectual property ownership, non-infringement, and indemnification contained in NovaMart's material commercial agreements with sellers, buyers, partners, and vendors.
B. Sources. The materials reviewed were drawn from the following sources:
• NovaMart Data Room — Folders 5.1 through 5.14 (Intellectual Property section), containing documents uploaded by NovaMart and its counsel in response to our initial due diligence request list.
• Supplemental Document Requests — Our first supplemental document request, dated March 5, 2025, sought additional detail regarding the Arcwave Software LLC license agreement, the open-source software component inventory, and employee/contractor IP assignment agreements for key technical personnel. Our second supplemental document request, dated March 18, 2025, sought executed IP assignment agreements for two early-stage independent contractors identified during our initial review, as well as additional information regarding international trademark prosecution status.
• Management Interviews — In-person and video conference interviews with Priya Narasimhan (Co-Founder & CTO) on March 12, 2025, and Amanda Trevino (General Counsel) on March 21, 2025, covering topics including NovaMart's technology development history, trade secret protection practices, open-source compliance procedures, and IP ownership chain for early-stage platform development.
C. Limitations. This memorandum is based on materials provided by NovaMart and its counsel in the Data Room and in response to our supplemental document requests, as well as the management interviews referenced above. The following limitations apply:
• No independent patent searches (including prior art searches, validity analyses, or freedom-to-operate analyses) were conducted by Calderwood & Harkness LLP as part of this review. Such searches may be conducted as part of bring-down diligence prior to closing or commissioned separately at Cascade's direction.
• No independent trademark clearance searches or common-law use searches were conducted. Our review of the trademark portfolio was limited to the registrations, applications, and documentation provided by NovaMart.
• Freedom-to-operate opinions with respect to NovaMart's products, services, and technology were not within the scope of this review.
• We did not conduct an independent technical audit of NovaMart's software source code for open-source license compliance. Our analysis of open-source software usage is based on NovaMart's internal Q3 2024 audit report and representations made by NovaMart's engineering leadership.
• Our conclusions are based on the documents and information available as of the date of this memorandum and are subject to revision based on additional information received prior to closing.
III. PATENT PORTFOLIO
A. Overview. NovaMart holds a portfolio of U.S. utility patents and pending U.S. patent applications relating to its marketplace platform technology, search and recommendation algorithms, logistics optimization software (NovaShip), and payment processing integrations. These patents and applications cover key aspects of the technology that underpins NovaMart's core marketplace operations and fulfillment services.
As of the date of this memorandum, the patent portfolio consists of:
• Seventeen (17) issued U.S. utility patents
• Nine (9) pending U.S. patent applications (including one continuation application and eight non-provisional utility applications)
No design patents were identified in the Data Room or disclosed by NovaMart. NovaMart has not filed any foreign patent applications in any jurisdiction outside the United States, which is consistent with the company's exclusively U.S.-based operations.
Patent prosecution for NovaMart has been handled by outside patent counsel at Brecker & Liang LLP, an intellectual property boutique located in Austin, Texas. Brecker & Liang has served as NovaMart's patent counsel since 2018 and has managed the prosecution of all patents and patent applications in the current portfolio. Prior to 2018, a limited number of early patent applications were filed by a solo patent attorney, Douglas Rhee, who has since retired; those matters were transitioned to Brecker & Liang.
B. Issued Patents — Summary Table
The following table summarizes the seventeen (17) issued U.S. utility patents held by NovaMart Global Inc. A complete schedule with full patent claims, prosecution histories, and assignment records is set forth in Appendix A.
The patented technologies may be grouped into the following five categories:
(a) Marketplace Platform Architecture (Patents Nos. 1, 2, and 15): These patents cover the core multi-tenant marketplace infrastructure, including the seller onboarding system, product listing optimization engine, and adaptive pricing engine. These are foundational to the NovaMart marketplace's ability to efficiently manage its base of approximately 62,400 active sellers.
(b) Search and Recommendation Engine (Patents Nos. 3, 4, 5, and 16): These patents relate to NovaMart's proprietary algorithms for personalized product discovery, search relevance scoring, collaborative filtering, and buyer intent prediction. These technologies are a key competitive differentiator for NovaMart's marketplace, though they function in conjunction with the licensed Arcwave search algorithm (see Section X.B below).
(c) NovaShip Logistics Technology (Patents Nos. 6, 7, 8, 9, 14, and 17): This is the largest category within the patent portfolio, with six issued patents covering fulfillment center routing optimization, inventory allocation, real-time shipment tracking, last-mile delivery optimization, automated returns processing, and distributed warehouse management. These patents underpin the NovaShip logistics network.
(d) Seller Analytics Dashboard Technology (Patents Nos. 10 and 11): These patents cover the seller performance analytics platform and seller scoring/ranking methodology, which are integral to NovaMart's quality control and marketplace integrity.
(e) Payment Processing Security Protocols (Patents Nos. 12 and 13): These patents relate to tokenized payment processing and fraud detection for multi-party marketplace transactions.
All seventeen issued patents are owned directly by NovaMart Global Inc. Assignment records on file with the USPTO confirm the proper chain of title from the named inventors to NovaMart. No patents are held by subsidiaries, special-purpose vehicles, or third parties on NovaMart's behalf. No joint ownership arrangements with respect to any patent have been identified.
C. Pending Patent Applications
NovaMart has nine (9) pending patent applications currently under prosecution at the USPTO. These applications are summarized below, with a complete schedule set forth in Appendix A.
Pending applications are not guaranteed to issue as patents. We note that at least two of the applications that have received Office Actions (P-1 and P-3) have had their claims narrowed in response to prior art rejections raised by the USPTO Examiner. Application P-1, relating to dynamic inventory rebalancing, received a non-final rejection citing three prior art references; NovaMart's patent counsel has amended the claims to distinguish over the cited art, and the response is currently under review by the Examiner. Application P-3, relating to seller biometric verification, had certain independent claims rejected under 35 U.S.C. § 103 for obviousness; a response was filed in January 2025 narrowing the claims to specific aspects of the biometric authentication process.
Application P-2 is a continuation application of issued Patent No. 3 (US 10,678,901), which covers NovaMart's personalized product discovery algorithm. This continuation is strategically significant, as it seeks claims directed to additional aspects of NovaMart's core marketplace search technology, including contextual search query expansion techniques that build upon the foundational algorithms covered by the parent patent. CTO Priya Narasimhan identified this application during our management interview as a priority for NovaMart's technology roadmap.
All patent prosecution is currently handled by Brecker & Liang LLP, Austin, Texas (Jennifer Liang, lead patent attorney). Prosecution files were available for review in the Data Room, and we found no irregularities in the prosecution timelines or the handling of USPTO correspondence.
D. Patent Encumbrances and Assignments
Our review of patent ownership and encumbrances yielded the following findings:
• Assignments. All seventeen (17) issued patents and all nine (9) pending patent applications have been properly assigned to NovaMart Global Inc. Assignment records were confirmed through review of documents in the Data Room and cross-referenced against USPTO assignment records. The chain of title for each patent runs from the named inventor(s) to NovaMart Global Inc., either directly or through the execution of Proprietary Information and Inventions Assignment Agreements ("PIIAs"). See Section IX below for a discussion of employee and contractor IP assignment agreements.
• Liens, Security Interests, and Pledges. No liens, security interests, pledges, or other encumbrances have been identified on any patent or patent application in the NovaMart portfolio. We note that NovaMart's existing $150 million revolving credit facility with Ashford Savings Bank, N.A. (the "Ashford Credit Facility") includes a negative pledge covenant restricting NovaMart from granting security interests in its intellectual property without the lender's consent. However, the Ashford Credit Facility does not itself create a direct security interest in NovaMart's IP assets. As we understand from the Transaction structure, the Ashford Credit Facility is to be repaid in full and terminated at closing.
• Cross-Licenses and Patent Pools. No patent cross-license agreements or patent pooling arrangements involving NovaMart's patents were identified in the Data Room or disclosed by NovaMart's management.
E. Observations and Flagged Items — Patents
1. Pending Applications — Uncertainty of Issuance. Nine patent applications remain pending before the USPTO, and there can be no assurance that any or all of these applications will result in issued patents. The claims of pending applications may be further narrowed, rejected, or abandoned during prosecution. Cascade should assess the materiality of each pending application to the post-closing technology roadmap. In particular, Application P-2 (the continuation relating to marketplace search technology) is of strategic significance and warrants close monitoring.
2. Freedom-to-Operate Analysis. No freedom-to-operate ("FTO") analysis has been conducted as part of this due diligence review. An FTO study assesses whether NovaMart's current products, services, and technologies may infringe valid and enforceable patent claims held by third parties. We recommend that Cascade consider commissioning an FTO study for NovaMart's core marketplace and logistics technologies, either prior to closing or as a priority post-closing initiative. Such a study would typically be conducted by specialized patent counsel and would involve a review of third-party patent landscapes in the relevant technology areas.
3. No Pending Infringement Claims. No patent infringement claims are currently pending against NovaMart, and no active patent infringement claims brought by NovaMart against third parties were identified. A complete analysis of NovaMart's litigation history, including IP-related matters, is set forth in the separate Litigation and Regulatory Due Diligence Memorandum.
IV. TRADEMARKS
A. Overview. NovaMart maintains a portfolio of registered and common-law trademarks used in connection with its online marketplace platform, logistics services, and various product verticals. The trademark portfolio is a material asset of the business, as NovaMart's brand recognition among consumers, sellers, and industry participants is a key driver of the platform's value.
The key marks in the portfolio include:
• NOVAMART — The primary brand for the online marketplace platform
• NOVAMART GLOBAL — The corporate brand
• NOVASHIP — The brand for NovaMart's proprietary logistics and fulfillment network
• NOVAHOME — The brand for NovaMart's home décor vertical, which represents approximately $620 million in GMV and has been identified as a potential divestiture package in the antitrust contingency analysis prepared by our regulatory team
• Associated design logos for the NOVAMART and NOVASHIP marks
U.S. trademark registrations are maintained through the USPTO. NovaMart has also filed a limited number of international trademark applications, as discussed in Section IV.D below.
B. U.S. Trademark Registrations — Summary Table
The following table summarizes NovaMart's registered U.S. trademarks. A complete schedule is set forth in Appendix B.
All registered marks are currently active and in good standing with the USPTO. Required maintenance filings, including Sections 8 and 15 declarations (for marks past the five-year mark) and Section 9 renewal applications, have been timely filed where applicable. No marks are at risk of cancellation for failure to maintain.
We note in particular that the NOVAHOME word mark (Registration No. 6,234,567) is associated with NovaMart's home décor vertical, which has been identified in the antitrust contingency analysis as a potential divestiture package in the event that antitrust regulators require a divestiture as a condition to clearing the Transaction. If such a divestiture is required, the NOVAHOME mark and associated goodwill would likely need to be included in the divestiture package or licensed to the acquirer of the NovaHome vertical on terms to be negotiated.
C. Pending U.S. Trademark Applications
NovaMart has two pending U.S. trademark applications currently under prosecution:
The NOVACRAFT mark is intended for use in connection with a planned artisanal and handcrafted goods sub-vertical on the NovaMart platform, which NovaMart has indicated is expected to launch in Q3 2025. The application has been published for opposition, and the thirty (30)-day opposition period commenced on March 4, 2025. As of the date of this memorandum, no notice of opposition has been filed by any third party.
The NOVAMART VERIFIED mark is intended for use in connection with NovaMart's seller verification and quality assurance program, under which sellers meeting certain performance and authenticity standards receive a "Verified" badge on the platform. This application is awaiting initial examination by the USPTO.
No office actions or formal refusals have been issued with respect to either pending application.
D. International Trademark Filings
NovaMart has filed trademark applications in a limited number of international jurisdictions for its primary marks. These filings are summarized below:
NovaMart does not currently operate outside the United States, and these international filings appear to have been made defensively and in anticipation of potential future international expansion of the marketplace platform. Amanda Trevino confirmed during our management interview that the international filings were initiated at the recommendation of outside trademark counsel as a prophylactic measure to prevent third-party squatting on the NOVAMART and NOVASHIP marks in key markets.
Observation. International trademark coverage is incomplete. NovaMart has not filed in a number of commercially significant jurisdictions, including Australia, Japan, South Korea, India, Mexico, and Brazil. The NOVAHOME mark has not been filed internationally in any jurisdiction. If Cascade intends to pursue international expansion of the NovaMart marketplace platform post-closing, a comprehensive international trademark filing strategy should be developed to secure protection for all key marks in target markets. The cost of such an international filing program would depend on the number of jurisdictions and classes of goods/services covered, but could reasonably be expected to range from $150,000 to $400,000 for initial filings across ten to fifteen priority jurisdictions.
E. Common-Law Trademarks
NovaMart claims common-law trademark rights in various unregistered marks and slogans used in its marketing and advertising materials, including the slogans "Shop the Extraordinary," "Made for You, By Makers," and "Your Marketplace, Your Way." These marks have not been the subject of formal registration applications and are protected only to the extent of NovaMart's actual use in commerce and geographic reach.
Common-law trademark rights are inherently narrower than rights conferred by federal registration and may be more difficult to enforce, particularly against third-party users in jurisdictions or channels where NovaMart has not established market presence. We have not conducted a comprehensive review of common-law mark usage or the strength of NovaMart's common-law rights.
F. Trademark Encumbrances and Assignments
Our review of trademark ownership and encumbrances yielded the following findings:
• All registered U.S. trademarks and pending U.S. trademark applications are owned by NovaMart Global Inc. Assignment records confirm proper ownership.
• No trademark licenses to third parties have been identified, other than the standard, limited rights granted to sellers and buyers through NovaMart's marketplace Terms of Service, which permit platform participants to display the NovaMart name and logo solely in connection with their marketplace activities.
• No security interests, liens, or other encumbrances on NovaMart's trademarks have been identified. As noted in Section III.D, the Ashford Credit Facility contains a negative pledge covenant but does not create a direct security interest in NovaMart's IP assets.
• No co-existence agreements, consent-to-use agreements, or concurrent use arrangements with third parties have been identified.
• No trademark opposition or cancellation proceedings are currently pending against any NovaMart mark at the USPTO or in any international jurisdiction.
G. Observations and Flagged Items — Trademarks
1. NOVAHOME Mark and Potential Divestiture. As noted above, if the NovaHome vertical is divested as an antitrust remedy in connection with the Transaction, the NOVAHOME trademark (Registration No. 6,234,567) and associated goodwill would need to be addressed in the divestiture package. Options include (a) assigning the NOVAHOME mark to the acquirer of the NovaHome vertical, or (b) licensing the mark to the acquirer on a transitional or permanent basis. Cascade should coordinate with antitrust counsel on the appropriate treatment of the NOVAHOME mark in any divestiture scenario.
2. International Filing Gaps. International trademark coverage is limited and incomplete. Cascade should develop a post-closing international trademark filing strategy if international expansion is planned. We recommend prioritizing filings in the European Union (completing the pending EUIPO application), the United Kingdom (completing the pending UKIPO application), Canada (filing NOVASHIP and other key marks), Australia, Japan, and other target expansion markets.
3. No Material Issues — U.S. Portfolio. No material issues have been identified with NovaMart's U.S. trademark portfolio. All registrations are active and properly maintained, and no opposition, cancellation, or infringement proceedings are pending.
V. COPYRIGHTS
A. Overview. NovaMart holds copyright interests in a wide range of original works of authorship, including the source code for its marketplace platform, the NovaShip logistics platform, mobile applications for iOS and Android, seller and buyer portals, website content, marketing materials, technical documentation, API reference materials, and associated databases. Given the nature of NovaMart's business as a technology-driven marketplace, its software code represents the most commercially significant category of copyrightable works.
Formal U.S. Copyright Office registrations have been obtained for certain key software works, as described below. A substantial body of copyrightable works remains unregistered, though copyright protection under U.S. law attaches upon creation and fixation in a tangible medium of expression regardless of registration.
B. Registered Copyrights — Summary Table
The following table summarizes NovaMart's formal copyright registrations on file with the U.S. Copyright Office. A complete schedule is set forth in Appendix C.
All registrations list NovaMart Global Inc. as the author and claimant, with each work identified as a "work made for hire" within the meaning of 17 U.S.C. § 101. The registrations cover specific versions of the source code for the marketplace platform, the logistics engine, and the mobile applications. We note that registrations were made for selected major release versions and do not cover every incremental update or patch.
C. Unregistered Copyrights
NovaMart holds copyright interests in a substantial body of works that have not been formally registered with the U.S. Copyright Office. These include, but are not limited to:
• Website copy, blog posts, and editorial content published on the NovaMart marketplace platform
• Marketing collateral, including advertising copy, digital display assets, email marketing templates, and social media content
• Training materials and onboarding documentation for sellers and internal employees
• API reference documentation and developer guides for NovaMart's seller tools and integrations
• User-generated content policies, terms of service, and legal notices
• Internal engineering documentation, technical specifications, and system architecture diagrams
• Database compilations, including product catalog structures and transaction data schemas
Under U.S. copyright law (17 U.S.C. § 102 et seq.), copyright protection subsists from the moment an original work is fixed in a tangible medium of expression. Registration is not required for copyright to exist. However, registration is a prerequisite to initiating a federal copyright infringement action for works of U.S. origin (17 U.S.C. § 411(a)) and is required to be eligible for statutory damages and attorneys' fees in infringement actions (17 U.S.C. § 412). Registration also provides prima facie evidence of the validity of the copyright and of the facts stated in the registration certificate if registration is made within five years of first publication.
Recommendation. Cascade may wish to consider registering additional key software works post-closing, particularly newer versions of the marketplace platform and logistics engine source code, to enhance enforcement rights and preserve eligibility for statutory damages in the event of infringement.
D. Copyright Ownership and Work-for-Hire
NovaMart's copyright ownership framework relies on two principal mechanisms: (1) the work-for-hire doctrine under 17 U.S.C. § 101, pursuant to which works created by employees within the scope of their employment are automatically owned by the employer; and (2) express IP assignment provisions contained in Proprietary Information and Inventions Assignment Agreements ("PIIAs") executed by employees and in IP assignment clauses contained in independent contractor agreements.
The work-for-hire doctrine applies to works created by NovaMart employees acting within the scope of their employment. For works created by independent contractors, copyright ownership does not automatically vest in the hiring party under U.S. law unless the work falls within one of the nine enumerated categories of specially ordered or commissioned works under 17 U.S.C. § 101 and the parties have executed a written agreement specifying that the work is a work made for hire, or the contractor has otherwise assigned copyright in the work to the hiring party.
NovaMart's standard independent contractor agreement includes an IP assignment provision that assigns all right, title, and interest in works created under the engagement to NovaMart. However, as noted below and discussed further in Section IX.B, we were unable to locate executed IP assignment agreements for two early-stage independent contractors who contributed to platform development during the 2016–2017 period.
E. Observations and Flagged Items — Copyrights
1. Missing Early-Stage Contractor Agreements. Executed IP assignment agreements for two early-stage independent contractors who performed software development work during NovaMart's founding phase (2016–2017) could not be located in the Data Room. These contractors have been identified as Rajiv Mehta (a freelance back-end developer who contributed to the initial marketplace database architecture) and Chloe Baxter (a front-end developer who contributed to the initial user interface design). NovaMart's General Counsel, Amanda Trevino, has represented that IP assignment agreements were executed with both individuals, but copies have not been produced to date. A request for these agreements was included in our supplemental document request dated March 18, 2025, directed to Calloway, Brandt & Loewe LLP. This matter is discussed further in Section IX.B below.
2. SPA Disclosure Schedules. We recommend that the SPA disclosure schedules specifically address any gaps in the copyright ownership chain, including the missing contractor agreements referenced above, to ensure full disclosure and appropriate allocation of risk.
3. No Pending Copyright Claims. No copyright infringement claims are currently pending against NovaMart. No DMCA takedown proceedings of material significance have been identified. NovaMart, as an online marketplace, has a DMCA policy in place and regularly processes takedown requests from rights holders regarding allegedly infringing content posted by sellers on the platform; these are routine operational matters and do not constitute claims against NovaMart itself.
VI. DOMAIN NAMES
A. Overview. NovaMart maintains a portfolio of domain name registrations that support its commercial operations and online presence. The portfolio includes NovaMart's primary commercial domains, as well as defensive and protective registrations intended to prevent cybersquatting, brand dilution, and consumer confusion.
B. Domain Name Portfolio — Summary Table
The following table summarizes NovaMart's key domain name registrations. A complete schedule is set forth in Appendix D.
All domain names are registered in the name of NovaMart Global Inc. All registrations are managed through Domainvault Registrar Inc. and have WHOIS privacy protection enabled. No domains are at risk of imminent expiration; the earliest expiration dates are in March 2026, providing sufficient runway for post-closing renewal management.
C. Observations and Flagged Items — Domain Names
1. novahome.com Domain. Consistent with the considerations discussed with respect to the NOVAHOME trademark (Section IV.G above), the novahome.com domain name would need to be addressed in any divestiture of the NovaHome vertical. The domain would either be assigned to the acquirer of the NovaHome business or retained by NovaMart/Cascade with appropriate redirect arrangements.
2. No Domain Disputes. No Uniform Domain-Name Dispute-Resolution Policy ("UDRP") proceedings or other domain name disputes are currently pending involving any NovaMart domain name.
3. Post-Closing Review. We recommend a post-closing review of the domain name portfolio to ensure alignment with Cascade's branding strategy. This review should assess whether additional defensive registrations are needed, whether any domains should be consolidated or retired, and whether the registrar relationship should be maintained or transitioned to Cascade's preferred domain management provider.
VII. TRADE SECRETS AND PROPRIETARY KNOW-HOW
A. Overview. NovaMart identifies certain categories of proprietary information as trade secrets within the meaning of the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq., and applicable state trade secret laws (including the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code § 134A.001 et seq.). These trade secrets derive independent economic value from not being generally known to or readily ascertainable by competitors and other persons who could obtain economic value from their disclosure or use.
NovaMart has identified the following categories of proprietary information as trade secrets:
• Marketplace matching algorithms and buyer-seller pairing logic
• Seller scoring and ranking methodologies, including the proprietary metrics and weighting factors used to determine seller visibility and placement on the platform
• Pricing engine logic, including dynamic pricing models and competitive pricing analysis tools
• NovaShip fulfillment routing algorithms and warehouse management optimization logic
• Buyer behavioral analytics models, including purchase prediction and churn risk models
• Internal business data, including supplier terms, margin data, seller commission structures, and aggregated customer data
• Product sourcing intelligence and vendor relationship data
B. Trade Secret Protection Measures
NovaMart has implemented a multi-layered approach to trade secret protection, which we summarize below:
• Employee Confidentiality Agreements. All employees are required to execute a Proprietary Information and Inventions Assignment Agreement ("PIIA") upon hire, which includes comprehensive confidentiality obligations covering NovaMart's trade secrets and proprietary information. See Section IX.A for further detail.
• Contractor and Consultant NDAs. Independent contractors and consultants engaged by NovaMart are required to execute non-disclosure agreements prior to receiving access to confidential or proprietary information. Standard contractor NDAs impose confidentiality obligations that survive the termination of the engagement.
• Access Controls and Role-Based Permissions. NovaMart's internal systems implement role-based access controls that restrict access to trade secret information to personnel with a legitimate business need. Access to source code repositories, algorithmic specifications, and business intelligence data is governed by tiered permission structures managed through NovaMart's identity and access management system.
• Data Classification Policy. NovaMart implemented a formal data classification policy in 2021 that categorizes information into four tiers: Public, Internal, Confidential, and Highly Confidential. Trade secrets are classified as Highly Confidential and are subject to enhanced handling, storage, and transmission requirements.
• Physical Security. NovaMart maintains physical security measures at its Austin headquarters and fourteen fulfillment centers, including badge-access entry, surveillance systems, visitor management protocols, and secure server rooms.
• Encryption. Sensitive data is encrypted at rest (using AES-256 encryption) and in transit (using TLS 1.2 or higher) across NovaMart's systems.
• Employee Training. NovaMart initiated an annual employee training program on information security and trade secret protection in 2022. Training covers identifying and handling confidential information, reporting security incidents, and compliance with NovaMart's data classification policy. Completion rates for the 2024 training cycle were reported at approximately 94% of eligible employees.
C. Observations and Flagged Items — Trade Secrets
1. Overall Assessment. Trade secret protection measures appear generally reasonable and appropriate for a company of NovaMart's size (approximately 2,400 employees) and stage of development. The implementation of a formal data classification policy in 2021 and the initiation of annual training in 2022 reflect a maturing approach to trade secret governance.
2. No Misappropriation Claims. No trade secret misappropriation claims have been asserted by or against NovaMart. No incidents of suspected trade secret theft or unauthorized disclosure were identified in the Data Room or disclosed during management interviews.
3. Post-Closing Integration. We recommend that Cascade review NovaMart's data classification policy and access control framework post-closing to ensure consistency with Cascade's own information security standards and trade secret protection practices. Particular attention should be given to harmonizing access controls during the integration period, when personnel from both organizations may require cross-system access.
4. Change of Control and NDA Obligations. The change of control effected by the Transaction may trigger scrutiny under NDA obligations with certain third-party partners and vendors. While a change of control in a stock purchase transaction does not typically constitute a breach of NDA provisions (as NovaMart remains the contracting entity), certain NDAs may contain provisions that require notice of a change of control or that permit the counterparty to terminate the NDA upon a change of control. These agreements are tracked in the Change of Control Consent Tracker maintained by the deal team, and IP-related consents should be prioritized accordingly.
VIII. OPEN-SOURCE SOFTWARE USAGE
A. Overview. NovaMart's technology platform, like the vast majority of modern ecommerce and SaaS platforms, incorporates open-source software ("OSS") components. Open-source software is software distributed under licenses that permit use, modification, and redistribution, subject to compliance with the terms of the applicable license. The use of open-source software is standard practice in the technology industry and is not inherently problematic; however, certain open-source licenses impose conditions and obligations that, if not properly managed, can have material consequences for proprietary software that incorporates or interacts with open-source components.
NovaMart's engineering team, under the leadership of CTO Priya Narasimhan, maintains an internal inventory of open-source software components used in the NovaMart technology stack and has developed internal processes for evaluating and approving the use of new open-source components. An open-source software audit report was prepared by NovaMart's internal engineering team in Q3 2024 (the "Q3 2024 OSS Audit Report") and was provided in Data Room folder 5.9. Our analysis of open-source software usage is based primarily on this report and on representations made by NovaMart's CTO during our management interview.
B. Categories of Open-Source Components
The open-source components identified in the Q3 2024 OSS Audit Report may be grouped into two principal categories based on the type of license under which they are distributed:
Permissive Licenses. The majority of open-source components used by NovaMart are distributed under permissive licenses, including the MIT License, the Apache License 2.0, and the BSD (Berkeley Software Distribution) family of licenses. Permissive licenses generally impose minimal conditions on the use, modification, and redistribution of the software. They typically require attribution (e.g., inclusion of the original copyright notice and license text) but do not impose "copyleft" obligations — that is, they do not require that derivative works or software that incorporates the open-source component be distributed under the same license or that source code be disclosed. NovaMart's use of permissive-licensed components does not raise material IP concerns, provided that attribution requirements are met.
Copyleft Licenses. A smaller number of open-source components used by NovaMart are distributed under copyleft licenses, including the GNU General Public License v2 ("GPL v2"), the GNU General Public License v3 ("GPL v3"), and the GNU Lesser General Public License ("LGPL"). Copyleft licenses impose conditions that may require, under certain circumstances, that source code for software that is "linked" to or forms a "derivative work" of the copyleft-licensed component be made available to recipients under the same license terms. The scope and trigger conditions for these copyleft obligations vary among licenses and are the subject of ongoing legal interpretation.
NovaMart has represented that its GPL- and LGPL-licensed components are used in compliance with the applicable license terms. Specifically, NovaMart has stated that:
(a) GPL-licensed components are used as standalone tools or utilities and are not statically linked into NovaMart's proprietary code, thereby avoiding the creation of "derivative works" under the GPL.
(b) LGPL-licensed components are dynamically linked to NovaMart's proprietary software, which is the primary mechanism by which the LGPL permits proprietary software to use LGPL-licensed libraries without triggering the obligation to release the proprietary code under the LGPL.
AGPL v3 Component. One component identified in the Q3 2024 OSS Audit Report is distributed under the GNU Affero General Public License v3 ("AGPL v3"). The AGPL v3 is the most restrictive of the commonly used copyleft licenses, as it extends the copyleft obligation to "network use" — that is, if a modified version of AGPL-licensed software is used to provide a service over a network (such as a web application or SaaS platform), the AGPL requires that the complete source code of the modified version be made available to users of the service, even if the software is never conventionally "distributed." This is sometimes referred to as the "ASP loophole" closure.
The AGPL-licensed component identified by NovaMart is a data analytics library used in connection with NovaMart's internal business intelligence reporting. NovaMart's engineering team has represented that this component runs as a separate, standalone service that communicates with the NovaMart platform via API calls and does not form part of the platform's user-facing application. On this basis, NovaMart's engineering team has assessed that the component's use does not trigger the AGPL v3's network-use source code disclosure requirement, because the platform users do not interact with the AGPL-licensed component directly.
This assessment involves a fact-specific technical analysis and a legal interpretation of the AGPL v3's scope. We have not independently verified NovaMart's technical characterization of the component's deployment architecture, and the legal boundaries of the AGPL v3's network-use provision remain subject to differing interpretations among legal commentators.
C. Observations and Flagged Items — Open-Source Software
1. Informality of Compliance Program. NovaMart's open-source compliance program, while operational, is relatively informal. The Q3 2024 OSS Audit Report was prepared through a manual review process conducted by NovaMart's engineering team. NovaMart does not currently employ an automated open-source software scanning tool, such as Crestline Health IT (Ridgeline Data Systems), Glenrock Systems, Larkspur Data Systems, or Harborline Systems (Mend), to continuously monitor its codebase for open-source components and license compliance. The absence of automated scanning increases the risk that open-source components may have been introduced into the codebase without proper review and approval, and that copyleft-licensed components may be present in the codebase but not reflected in the Q3 2024 OSS Audit Report.
2. Automated Scanning Recommendation. We recommend that Cascade deploy its own automated open-source software scanning tool on NovaMart's codebase following closing to independently confirm compliance with open-source license obligations and identify any undisclosed copyleft-licensed components. This scanning should be conducted as a priority post-closing integration activity.
3. AGPL v3 Component Verification. The AGPL v3 component usage identified by NovaMart should be independently validated through a technical review of the component's deployment architecture and its interaction with NovaMart's proprietary platform code. If NovaMart's assessment is incorrect — for example, if the AGPL-licensed component is more tightly integrated with the user-facing platform than NovaMart's engineers have described, or if modifications to the component have been incorporated into the broader codebase — there could be an obligation to make the source code of the modified version (or potentially the interacting proprietary code) available to network users of the service. The potential consequences of non-compliance include exposure to claims by the open-source community or the copyright holder of the AGPL-licensed component, reputational risk, and the need to either remediate the integration or replace the component.
4. SPA Representations. We recommend that the SPA include a specific representation and warranty from the sellers regarding NovaMart's compliance with the terms of all open-source software licenses applicable to components incorporated into NovaMart's technology, with specific disclosure of copyleft-licensed component usage on the disclosure schedules. This representation should be drafted broadly enough to cover the AGPL v3 component and any other copyleft components identified through pre- or post-closing scanning.
IX. EMPLOYEE AND CONTRACTOR IP ASSIGNMENT AGREEMENTS
A. Employees. NovaMart requires all employees to execute a Proprietary Information and Inventions Assignment Agreement ("PIIA") upon commencement of employment. The standard NovaMart PIIA includes the following key provisions:
(a) Invention Assignment. The PIIA assigns to NovaMart all right, title, and interest in inventions, works of authorship, designs, discoveries, developments, improvements, trade secrets, and other intellectual property created by the employee (i) within the scope of the employee's employment with NovaMart, (ii) using NovaMart's equipment, supplies, facilities, or confidential information, or (iii) that relate to NovaMart's business or actual or demonstrably anticipated research or development activities.
(b) Work-for-Hire Acknowledgment. The PIIA includes an acknowledgment that all works of authorship created by the employee within the scope of employment are "works made for hire" under the Copyright Act, and to the extent any such work does not qualify as a work made for hire, the employee assigns all copyright interest to NovaMart.
(c) Confidentiality Obligations. The PIIA imposes confidentiality obligations on the employee with respect to NovaMart's proprietary and confidential information, both during and after employment.
(d) Non-Solicitation Provisions. Most PIIAs include non-solicitation provisions restricting the employee from soliciting NovaMart's employees, contractors, customers, or sellers for a period of twelve (12) months following termination of employment. The enforceability of these provisions varies by state and is addressed in the separate Restrictive Covenant and Non-Competition Analysis Memorandum.
(e) Disclosure of Prior Inventions. The PIIA requires the employee to identify any prior inventions, works of authorship, or intellectual property rights that the employee wishes to exclude from the scope of the assignment.
NovaMart currently has approximately 2,400 employees. NovaMart's General Counsel, Amanda Trevino, has certified in writing (via a management representation letter dated March 14, 2025) that executed PIIAs are on file for all current employees of NovaMart. We conducted a spot-check review of a sample of approximately fifty (50) PIIAs, selected to include a representative cross-section of engineering, product, design, data science, and management personnel. All fifty sampled PIIAs were properly executed by the employee and a NovaMart authorized signatory, and contained the standard invention assignment, work-for-hire acknowledgment, and confidentiality provisions described above. No irregularities were noted in the sampled agreements.
B. Independent Contractors and Consultants
NovaMart engages independent contractors and consultants for certain software development, design, data science, and consulting projects. NovaMart's standard independent contractor agreement includes an IP assignment provision that assigns to NovaMart all right, title, and interest in inventions, works of authorship, and intellectual property created by the contractor in the course of the engagement, along with confidentiality obligations consistent with those imposed on employees.