1. Mini Law Lesson How to Avoid Patent Trolls Brian Heidelberger bheidelb@winston.com Twitter @briheidelberger Info @ www.winston.com/bheidelberger

2. IMPORTANT DISCLAIMER I am not your attorney. This is not legal advice. But I am a Jr. inventor and you owe me some $$ … 2

3. What Are “Patent Trolls”? Buy patents and assert them in litigation Settlement offered are well below cost of litigation Litigation is expensive, risky and costly So majority of troll cases settle Cost agencies $10MM/year 3

4. How They Take Advantage of the System? Patents have “fuzzy boundaries” It’s time and cost prohibitive to search all concepts before use 4

5. How it Impacts the Ad World Agency’s traditionally:  run preliminary trademark searches  Create original works or obtain a license  Get insurance But with patents  Running search is hard/expensive  Creating original work doesn’t remove liability  Can’t get good insurance All agencies are doing digital Patents are hard to interpret Asserted over commonly used technologies 5

6. Patent Infringement Cases/Claims QR Code-related Patents Asserted Alleging that using QR codes containing a shortened link in marketing materials constitutes patent infringement. 6

7. Patent Infringement Cases/Claims Text Message Patents Asserted Alleging patent covers sending a text message that includes a URL within the notification. 7

8. Patent Infringement Cases/Claims Network Scanning Patents Asserted Alleging patents cover hooking up a scanner and e-mailing a PDF. Demanding $1,000/employee 8

9. How Agencies Can Protect Themselves? 4A’s Patent Risk Guidance Advertisers should assume all risks  They know searching is time and cost prohibitive  They are asking agencies to act as insurers Agencies should factor risk into pricing  Could get several claims up to $200Kish If indemnifying at all, indemnity should limit/cap liabilities 9

10. How Agencies Can Protect Themselves? 4A’s Patent Risk Guidance (Cont.) Agency should also:  design software so that its flexible  use features that have been the market for a long time  watch for other patent claims  do patent searching when using new technologies  investigate insurance coverage  Attempt to disavow 3 rd party responsibility 10

11. How Agencies Can Protect Themselves? 4A’s Patent Risk Guidance (Cont.) Some Additional Thoughts:  Do you really want to do digital? Is the risk/reward worth it?  Can you subcontract liability away? – Subcontractor must have appropriate insurance coverage or size to make it viable  Develop an internal process for considering these issues for each new project 11

12. How Advertisers Can Protect Themselves Client’s view:  Agency is the expert in digital  Agency shouldn’t take on work in which it is not expert  Agency is in the best position to determine what should be searched and what risks are out there  Agency is traditionally responsible for any claims and this is nothing different 12

13. How Advertiser’s Can Protect Themselves? Have agencies undertake liability But …. Not Foolproof Additional steps must be taken Internal polices/searching/monitor Factor several up to $200Kish settlements into marketing budget 13

14. Agencies and Advertisers Could Collaborate Share risk  Commonly used technologies  Maximum caps on agency liability  Minimum threshold on agency liability Take Legislative Action Together Via AAAA and ANA Undertake Proactive Patent Challenges Together 14

15. Follow me on Twitter @BriHeidelberger 15

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