SMART GRID PATENTS AND STANDARDS INTRODUCTION TO THE PANEL Jeff Young, Moderator Alston & Bird LLP

OUR GOAL: That you leave with insights into: – the important role patents will play in stimulating new technology and in the SGIP patent process; – the status of the SGIP's "IPR policy" and the actions of its IPR working group; – how lessons learned in past standards initiatives might be applied by SDOs in the Smart Grid initiative when patents are essential to best practices.

Sample Smart Grid Patents and Application Chosen Merely to Show Variety NumberTitleOwner 2010/ Systems and Methods for Controlling Energy Consumption Demi Energy, Inc. 7,679,247Lift magnet mechanism for flywheel power storage systems Beacon Power Corporation 7,337,153Resolving Energy Imbalance Requirements in Real-Time Siemens Power Transmission & Distribution, Inc. 7,305,281Management of a Bulk Electric Power Market ISO New England Inc. 7,333,880Aggregation of Distributed Energy Resources EnerNOC, Inc. 7,376,491Detection of Islanding in Power Grids General Electric Company 2010/ Electric power grid control using a market-based resource allocation system Battelle Memorial Institute Who is Obtaining Smart Grid Patents?

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Examples of Litigation Affecting the Grid IPCo. v. Oncor, Reliant, Sensus, Trilliant, Tendrill, et al.  No. 2:09-cv DF (filed E.D. Tex.)  – US Pat Nos 7,054,271; 6,249,516  – Wireless mesh network system for optimizing communication pathways. EON Corp. v. Sensus Metering Systems,  No. 2009cv00116 (E.D. Tex. filed March 13, 2009)  – US Pat Nos. 5,388,101 5,481,546  -- Two-way interactive communication video network.

IPCO Mesh Networks 7,054,271 (a) Software (b) Not likely filed with Smart Grid in mind

Avoiding Patent Infringement Be careful – making, selling or just using a product can be infringement Before a major investment : – Have your patent attorney do a patent infringement search – Stick to technology not covered by the patents found – Research patent disputes to see who is actively enforcing their patents – Purchase from vendors who indemnify their customers

Leveling the Playing Field Obtain your own patents – Products, systems, processes, software, business methods are patentable Must be new and non-obvious – Act promptly to avoid filing deadlines – Encourage employees to share their ideas for improvements Require employment contracts with invention assignment provisions

Some reasons why a patent owner would: – Accept RAND licensing: Collect a smaller royalty from an entire industry; Assure that its technology is covered by the standard. – Hold patent out of the standards process: Prevent others from using its own implementation of the standard; Seek a higher royalty rate from licensees.

TRACKING RAND LICENSES Std No. Patent OwnerContact for License Patent Serial No. (if indicated) Letter Date Assurance Received Date record entered or revised (if known) Motorola Inc East Algonquin Road, Schaumburg, Illinois Hugh C. Dunlop - European Patent Attorney, TEL: , FAX: not indicated 1-Mar-1994 yes Intermec Corporation th Avenue West, PO Box 4280, Everett, WA L. David Rish - Intellectual Property Law Counsel, not indicated 26-Oct-1995 yes IEEE Std and amendments Motorola: In the event the proposed standard is adopted and cannot be practiced without the use of patents now or hereafter owned by Motorola, Motorola agrees to license those patents on a non-discriminatory basis offering fair and commercially reasonable terms.

PANELISTS: Dr. George Arnold John Caskey Yann Dietrich Richard Schomberg

SAFE AND EFFECTIVE STANDARDS PARTICIPATION ADOPT CLEAR INTERNAL POLICIES – Company will comply with SDO patent policies. – Company will not knowingly withhold IP rights in an SDO process. – Company will make considered decisions for compliance with SDO policies regarding disclosure of proprietary information Outside of Working Group sessions In consultation with the Legal Department – That required disclosures and licensing commitments will be made in writing by management. Q&A

– Adopt a fact sheet template for internal approval to join an SDO process. Require a description of trade secrets and patent rights likely to be involved in the standard. What will Company gain and lose if its technology is adopted in the standard? What competitor tactics are expected? – Prior to each Working Group session, have an internal meeting: Remind participants the SDO meeting is not under NDA. Cover Company information that should not be disclosed. Remind participants not to make any licensing commitment on the spot. – Adopt a report template to be completed after Working Group meetings, copying the Legal Department INTERNAL STANDARDS - EXAMPLES

“PATENT HOLD-UP” SAGAS RAMBUS (DRAM and DDR SDRAM) – Participated in JEDEC, disclosed initial patent, did not disclose subsequent applications. Sued competitors practicing standards. – Vilified as a “patent hold-up.” – Weathered an FTC antitrust violation and verdict of fraud QUALCOMM (MPEG) – Intentionally hid IP from the SSO (JVT), knowing it might reasonably be necessary to practice the standard, and that SSO participants treated the policy as imposing a duty to disclose. – Then misled the trial court by falsely asserting that Qualcomm did not participate in the SSO. – Patents ruled unenforceable against standard-compliant products Q&A

2.6 Intellectual Property Upon ratification of the Bylaws, SGIP will develop an Intellectual Property policy consistent with the following principles: a. The SGIP, the SGIPGB, all committees and all working groups and subgroups function in an open working environment. The SGIP and its Members will not accept any documentary or oral disclosure of proprietary information from any Member as a part of the SGIP's conduct of business. In addition, no information of a secret or proprietary nature will be made available to the SGIP as official documents, and no such documents (or documents marked as such) will be made SGIP official documents or forwarded to the membership. b. All proprietary information which may nonetheless be publicly disclosed by any participant during any meeting of the SGIP, the SGIPGB or its committees or working groups will be deemed to have been disclosed on a non-confidential basis, without any restrictions on use by anyone, except that no valid copyright or invention right will be deemed to have been waived by such disclosure. SGIPGB and SGIP Charter March 29, SGIP BYLAWS May 2010 Q&A

2.6.1 SGIP patent policy - Inclusion of Patents in SGIP-Identified Products Some SGIP-identified product may include the use of an essential patent claim (one whose use would be required for compliance with that standard) if technical reasons justify this approach. If SGIP receives a notice that a proposed or an approved SGIP product may require the use of such a patent claim, the procedures in the following sections will be followed Statement from patent holder The SGIP will request from the patent holder or a party authorized to make assurances on its behalf, in written or electronic form an assurance that a license to such essential patent claim(s) will be made available to applicants desiring to utilize the license for the purpose of implementing the SGIP product either: a. On a non discriminatory basis and under reasonable terms and conditions; or b. Without compensation and under reasonable terms and conditions that are demonstrably free of any unfair discrimination. If the patent holder or party authorized to make assurances on its behalf does not agree to these terms, then this decision will be documented clearly. As it may pose risks to the implementation of the Smart Grid, this decision will be seriously considered by the SGIP in any related activity or vote Record of statement A record of the patent holder’s statement will be retained in the SGIP files and posted on-line.

Notice When the SGIP receives from a patent holder the assurance set forth in above, the expected result will include a note substantially as follows: NOTE – The user’s attention is called to the possibility that compliance with this expected result may require use of an invention covered by patent rights. By publication of SGIP expected results, no position is taken with respect to the validity of any such claim(s) or of any patent rights in connection therewith. If a patent holder has filed a statement of willingness to grant a license under section 2.6.1, details may be obtained from the patent holder Responsibility for identifying patents Neither the SGIPGB nor SGIP is responsible for identifying patents for which a license may be required for use of an SGIP expected result or for conducting inquiries into the legal validity or scope of those patents that are brought to their attention.SGIPGB and SGIP Charter March 29, Copyrights Copyright in materials produced prior to Membership in the SGIP remains the property of the copyright owner. However, copyrighted materials offered for incorporation into SGIP outputs must be made available on a royalty-free basis. Members who contribute to SIGP outputs are requested to assign copyright to NIST so that NIST may place them in the public domain. Standards developers whose standards are referenced in SGIP outputs retain copyright ownership and control of the standards themselves.

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