Invitation to join LOT Network Ken Seddon CEO, LOT Network Sept 30, 2015

Ken Seddon - CEO, LOT Network Ken Seddon comes to LOT with over 20 years experience managing all areas of intellectual property. Ken has worked at some of the largest patent holders the world including Apple, Micron, Motorola, Intel and most recently as the Vice President of IP at ARM. A resident of Phoenix, Arizona, Ken graduated from the Georgia Institute of Technology, with a bachelor's degree in Computer Engineering. He also earned a master’s degree in Solid State Device Physics and a Juris Doctorate from Arizona State University.

The Patent Assertion Entity (PAE) problem

PAE problem getting worse PAE litigation is on the rise! 2015 likely to be a record based on 1st half actuals PAEs are responsible for 84% of high-tech patent litigation in the US! Patent Suit Filings Continue On Record Pace, Report Says By Matthew Bultman Law360, New York (July 14, 2015, 6:30 PM ET) -- More than 3,100 new patent cases have been filed in federal court so far this year, a record-breaking number that could put patent filings in 2015 at an all-time high, according to a report released Tuesday.

PAEs - hurting innovation 1 PAE litigation is on the rise! 2015 likely to be a record based on 1st half actuals PAEs are responsible for 84% of high-tech patent litigation in the US! 8 7 CLS V Alice decided in June of 2014

The PAE problem is getting worse 4 (thousands) US Patent Office: number of patents and new applications by year The number of patents issued by the US Patent Office is growing! (Over 300,000 new patents in 2014 alone)

The PAE problem is getting worse Over 50% of patents sold last year relate to software PAEs acquired over 15,000 patent assets in 2014 alone 5 6

Where are the PAEs getting their patents? 81% of patents acquired from PAEs come from companies 7 Source of Patents Companies provide PAEs with most of the patents

PAEs target small/medium sized software companies 3 62% of target companies have < $100m in revenue 3 Defendant Revenue Profile You are not too small to get sued.

PAEs target small/medium sized companies 62% of the patents used by PAEs in litigation are software patents The average annual revenue of an PAE target company is $10.8 million/year On average a software company pays $3.32 million for each lawsuit from an PAE PAEs cost companies over $29 billion/year in direct accrued costs Small or medium sized companies pay 37% ($10.73 billion) of those costs 8 2 2 2 2

Overview of LOT

LOT Summary A network of companies that are working to address the problems of PAEs. Members give each other a license to patents so ALL LOT members are “immunized” from patents that leave the network and fall into the hands of PAEs.

LOT believes in traditional uses of Patents LOT Members are still allowed to: Assert their patents directly against other LOT members Assert their patents directly against non-LOT members Sell their patents to operating companies (LOT agreement does not apply) Sell their patents under spin-out/M+A activity There is no burden to membership: LOT members are not required to report if they sold a patent LOT members do not have to give notice before they sell a patent You may withdraw anytime. Future patents not impaired

How does LOT work?

Illustration of the LOT Agreement's Operation Over 325,000 WW assets Over 99,000 US assets 2 1 LOT Today: Companies 1 and 2 join the LOT Agreement. 1 2 Tomorrow: Company 2 sells a patent to Company 3. Company 3 is not in LOT. 2 1 LOT 3 $ License to LOT membership automatically becomes effective. Legend - Transferred patent(s) Future: LOT membership immune from sold patent, regardless of the owner. 2 1 LOT 3 X 4 X

LOT supports traditional uses of IP LOT Network members are free to assert their patents offensively or defensively against non-LOT members. No restrictions on how IP is licensed to operating companies in a cross-license or commercial agreement. (note, exclusive license to an PAE invokes the license) 3 1 2 LOT

LOT supports traditional uses of IP 3 LOT Network members are free to assert their patents offensively or defensively against other members. No restrictions on how IP is licensed to operating companies in a cross-license or commercial agreement. 1 2 LOT

LOT Network is non-profit: Costs

LOT Members have divested patents Current LOT members have divested over 1,200 US assets in last two years. (3,300 ww assets) H04N - Transmitting images H04L - Transmitting Digital Information G06F - Digital Data Processing H04B - Transmitting signals H04W - Wireless communications Top divested categories 211 patents

14 Largest patent categories currently in LOT membership Over 99,000 US assets Over 325,000 ww assets H04N - Transmitting images H04L - Transmitting Digital Information G06F - Digital Data Processing G03G - Storing images G06Q - Data processing system Top current categories 17,339 assets

Overlap of patents by top CPC codes Social Media Co (3459 US assets) LOT Network (99,000 US assets) A61B G06K H04W G03F H04B G01R H04M Over 90% of Facebook’s portfolio overlaps with LOT’s Top 14 G06F H01L H04N G02B G03G G06Q H04L G06T B41J A61B - Medical Diagnosis B41J - Printing G02B - Optical G03F - Semiconductor G03G - Electrography G06F - Digital Data Processing G06K - Presentation of Data G06Q - Data Processing Systems G06T - Image Data Processing H01L - Semiconductor H04B - Transmitting signals H04L - Transmitting Digital Information H04N - Transmitting images H04W - Wireless communications

Overlap of patents by top CPC codes Top 5 Bank (2154 US assets) LOT Network (99,000 US assets) G02B H04B H04L G06Q G03G G03F G07D G07F Over 82% of Bank of America’s portfolio overlaps with LOT’s Top 14 H04N A61B G06T G06K B41J G06F H04W H01L A61B - Medical Diagnosis B41J - Printing G02B - Optical G03F - Semiconductor G03G - Electrography G06F - Digital Data Processing G06K - Presentation of Data G06Q - Data Processing Systems G06T - Image Data Processing H01L - Semiconductor H04B - Transmitting signals H04L - Transmitting Digital Information H04N - Transmitting images H04W - Wireless communications

Recommendation: LOT for Suppliers Provided by: Jeffrey Blumenfeld Chair, Antitrust & Trade Regulation Partner, Tech Group Lowenstein Sandler LLP 2200 Pennsylvania Avenue, NW Washington, DC 20037

Significant Value in adding suppliers to Membership Significant value in adding some Suppliers Both Suppliers and Customers get protection from patents outside their bilateral ecosystems Value Company A Company C Company B Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier LOT NETWORK

LOT does not require members to cross-license each other What LOT Network IS NOT LOT does not require members to cross-license each other LOT does not buy, sell, own, or invalidate patents LOT does not prohibit members from selling their patents LOT does not prohibit members from asserting their patents LOT does not prohibit members from monetizing their patents LOT does not criticize the PTO or patent quality

No burden to being in the LOT Network Anyone can join. Any industry, any country, regardless of portfolio size Agreement drafted to obviate the need of members to give notice, prepare covenants, or track patents that are transferred No need to report patent transfers or transactions Increases freedom to operate As membership grows, so too grows the benefit to each member

Questions

THANK YOU

US Patent and Trademark Office ROL Group Linda Biel, AST References Patent Freedom https://www.patentfreedom.com/about-npes/litigations/ James Bessen & Michael Meurer, The Direct Costs from NPE Disputes, 99 Cornell L. Rev. 387 (2014). RPX 2014 Litigation Report. http://www.rpxcorp.com/wp-content/uploads/sites/2/2015/03/RPX_Litigation-Report-2014_FNL_040615.pdf US Patent and Trademark Office http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm ROL Group http://www.richardsonoliver.com/news/2014/12/1/buyers-and-sellers-in-the-2014-brokered-patent-market Linda Biel, AST Dan McCurdy, RPX presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA. Kevin Jakel, Unified Patents presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA. Mark Lemely & Douglas Melamed, Missing the forest for the Trolls, Cornell Law Rev. 2013.