1. 1 HOW TO ASK A QUESTION

2. Do I Look at the Forest or the Trees? Assessment of Large Patent Portfolios For Cross-Licensing, FTO and Purchase Moderator:Valentina Boyet, IP Counsel, SAP, AG Panelists:Danielle Johnston Holmes, Patent Counsel, Microsoft Corporation – dajohn@microsoft.com Russ Slifer, Chief Patent Counsel, Micron Technologies, Inc. – rslifer@micron.com Steven W. Lundberg, Shareholder, Schwegman, Lundberg & Woessner, P.A. – slundberg@slwip.com

3. 3 Discussion Scenarios Scenario 1: Patent Cross License Scenario 2: Freedom to Operate/Landscape Scenario 3: Portfolio Purchase

4. 4 Scenarios for Discussion by Panelists Cross License Scenario 1 Client has an opportunity to enter into a patent cross license. Client is a Fortune 500 consumer electronics company with portfolio of 10,000+ patents spanning a range of software, computer and electronics technologies. Client is negotiating a cross-licensing agreement with a comparably sized company and 5,000 patents that competes in part with the client.

5. 5 Scenarios for Discussion by Panelists Cross License Scenario 1 Questions for panel: 1) What do you think the executives and managers at the Client want to know or need to know in order to make a sound business decision regarding the terms of the cross- license? – PCL v. “détente” – Business and legal considerations – Balancing payment?

6. 6 Scenarios for Discussion by Panelists Cross License Scenario 1 Questions for panel (con’t): 2)What is the key information that you need in order to advise your client on the proposed cross-license? –Understand business considerations (present & future) –Portfolio comparisons (size, trends, technology areas, etc.) –Understand other company’s products/revenue –Overlapping patent and technology areas

7. 7 Scenarios for Discussion by Panelists Cross License Scenario 1 Questions for panel (con’t): 3)If you only had one week to make an assessment, what would you do? –Start with “the forest” (portfolio size, technology comparisons, etc.) –Focus on a couple “trees” (identify specific patents of interest)

8. 8 Scenarios for Discussion by Panelists Cross License Scenario 1 Questions for panel (con’t): 4)What data sources or analysis tools would you use for your assessment? What are typically done by in-house vs. outside patent counsel? –General patent searching tools (Delphion, UPC/IPC, citation analysis, etc.) –In-house tools (auto-classification) –Mostly done in-house –Sometimes use OC to help prepare specific claim charts (if needed)

9. 9 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Client is considering a new product line in an emerging, fast growing new technology and wishes to obtain a patent landscape and freedom to operate assessment. There are approximately 1000 existing patents generally related to the area, and about ten companies that offer products in the general area. Client does about $1B in revenue but has never competed in the new technology. They plan on investing $200M to enter the market.

10. 10 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel: 1.How would you investigate and assemble a patent landscape? – Patent Landscapes vs. Freedom To Operate (FTO) – FTO typically provides management with risk levels relative to the investment needed to enter the market – Patent Landscapes provide a panoramic view of patents in the relevant technology area – A Patent Landscape can form a portion of the underlying data needed for a FTO assessment.

11. 11 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 2.What would the landscape look like? – Patent Landscapes can take many forms – List of key patents, key competitors, and an analysis of what the landscape means to the technology road map of the business – The output can be relative patent coverage based upon technology areas

12. 12 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 3.How to make sure you find all the relevant patents and applications? – Define technology – broad enough to encompass all variants of the interested technology. – Sub-components of technology are often excluded from clearance – Use commercial tools and/or manual approach: keyword searches, class/subclass, forward/backward citations, and assignee searches

13. 13 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 4.What would you hope to learn from the landscape? – Who is dominant in space, if anyone – relative life cycle of technology based on patenting activity over time period. – Discover fundamental/dominating patents that will need to be licensed – who owns them. – Identify gaps in technology - what are the patenting opportunities for my company. – Helps R&D identify patent risks and opportunities during technology development.

14. 14 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 5.What process would you use to review the 500 patents and pick out the most relevant ones ? – “Eyeballs on” one at a time – triage into two or three groups. – Check each patent in the “pertinent” category – some require close scrutiny – Different levels of analysis that can be performed. – Many analytic tools merely identify patents – no claim analysis. – I prefer to dig deeper using a tool such as Lucid Patent’s Claimbot® claim coverage maps

15. 15 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 6.What type of process do you use to generate a freedom to operate opinion and clear or design around all the patents that have been flagged as potentially applicable? – Key difference – patent landscape vs. freedom of operation assessment. – Business level risks vs technology level risks. – Areas of criticality need legal assessment. – Counsel needs to combine patent knowledge and owner behavior to provide the level of assessment desired.

16. 16 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 7.How do you deal with assessing the likely impact of pending applications ? – Determine the most active players. – For a particularly important patent do a novelty analysis determining “safe harbors” from patent based on prior art. – Assume all else may get patented and assess from there.

17. 17 Scenarios for Discussion by Panelists Landscape/Freedom to Operate Scenario 2 Questions for panel (con’t): 8.What advice do you give the Client about the “blind spot” of pending applications not yet published ? – Hope you don’t get blind sided – Perhaps some industry research – do any key competitors claim to have important patents pending?

18. 18 Scenarios for Discussion by Panelists Portfolio Purchase Scenario 3 Client has been invited to bid at an auction for a portfolio of 300 patents held by a company going out of business. The client has some sales in the area but they are minimal. However, the market for related products is over $1B and the client wishes to expand its product offering. You have two weeks to complete your analysis.

19. 19 Scenarios for Discussion by Panelists Portfolio Purchase Scenario 3 Questions for panel: 1.What measures of valuation do you use in this scenario? – The short answer -- what’s it worth to you? – Focus on why you are buying portfolio to drive valuation – Why: relief from liability, counter-suit, cross-licensing, troll assertion, exclusivity – In this scenario: possibly liability, cross-licensing value and market exclusivity

20. 20 Scenarios for Discussion by Panelists Portfolio Purchase Scenario 3 Questions for panel (con’t): 2.Do you bring in valuation experts to assist you in assessing the price? – Depends on main purpose for purchase of patents – What type of expert? Accountant, Patent Attorney, other? – Accounting/Finance approach – Patent Attorney approach – In this scenario: precise value of portfolio as a stand alone asset is probably secondary if not tertiary to the business objective

21. 21 Scenarios for Discussion by Panelists Portfolio Purchase Scenario 3 Questions for panel (con’t): 3.What level of analysis of the patents do you do? – Typically patents are sorted into most important, somewhat important and not important – Most important and some somewhat important patents would be given thorough scrub, often including a validity search – The remaining patents would be scrutinized to a much lesser degree

22. 22 Scenarios for Discussion by Panelists Portfolio Purchase Scenario 3 Questions for panel (con’t): 4.If you conduct a validity search on key patents, how do you avoid documenting or sharing assessments that may challenge the validity of a patent you may ultimately own? – Couch validity concerns in terms of risk that a court may find patent invalid – NOT your opinion – Avoid disclosing prior art you believe raises concerns – Avoid any internal documentation either pro or con to patents – if you don’t buy the patents you may end up being sued on them – Possible co-counsel agreements for joint privilege

23. Contact Information Danielle Johnston Holmes -- dajohn@microsoft.com Russ Slifer -- rslifer@micron.com Steven W. Lundberg -- slundberg@slwip.com

24. 24 HOW TO ASK A QUESTION