1. IP3 Recap and lessons learned
Russell Binns
CEO of AST

2. IP3 Introduction The secondary patent market presents many challenges:
NPEs proactively offer to buy patents before they are even offered for sale
Operating companies sift through mountains of patents for sale yearly
IP3 was a cost-effective, proactive experiment to clear patents for operating companies and mitigate risk.
Modeled after Google’s Patent Purchase Promotion (PPP), IP3 simplified and made a more efficient buying process:
Participants determine what to buy
All Participants receive a license to all patents purchased
Purchased patents are released back onto the open market after the program ends
Aids operating companies in proactive defensive strategies

3. Google’s Patent Purchase Promotion (PPP)
Background
Google’s Patent Purchase Promotion (PPP)
Launched in May 2015, Google wanted to remove the friction to buy patents by:
Shortening response time to sellers
Simplifying the entire process
Eliminating the “used car-like” price haggling
Results:
4x the expected submission rate
Simplified decision-making process
High quality patents submitted and purchased

4. IP3 Goals Improve efficiency of the transaction market
Get submissions that we might not otherwise see, and potentially disrupt private transactions, particularly to NPEs
Get good patents at reasonable prices with no negotiation
Data gathering
Publicity for AST to a wider audience of potential sellers and potential members

5. Results Very strong and positive media response
Nearly 1400 patent families submitted
85% of the submissions below $500k
65% of the submissions under $125k
Median price – $100k
52% from brokers
Purchased Deals
55 deals acquired
Ranged from $10,000 to $325,000
Avg price per family – approx. $96,000
Took 4 rounds of voting and demonstrated the power of group thinking and wisdom, where Participants got the benefit of collective thinking of similarly- situated sophisticated companies.

6. IP3 – Why It Worked and What We Learned?
Proven
Model
Google PPP program
Transparent, cost effective risk mitigation via patent purchases
Members choose acquisition targets from open market deal flow
Pre-approved budgets
Aligned w/ AST Mission & Practices
Deadlines to spur coordinated and collective action
Seller provides “Buy It Now” price, removing bidding uncertainty
Batching increases efficiency
Pre-approved budget enables more efficient “shopping”
Crowd sourced acquisition decisions (proxies and leadership)
Easier to
Buy

7. IP3 – What We Learned?
That there is a strong demand from companies to participate in an experiment and a strong demand to participate in future IP3s
There was a realization that there is strength in numbers and we saw Participators successfully recruiting other Participators.
Group thinking/crowd sourcing among similarly situated sophisticated companies lead to higher satisfaction and confidence in acquisition decisions, and made for quicker decision making
Many sellers have difficulty valuing assets and naming their own price
Sellers also had difficulty with understanding family members and terminal disclaimers
Need to do a better job educating and instructing sellers.
Sellers and the market are clearly looking for better solutions in the secondary market
Strong interest from brokers, companies, and individuals
IP3 brought awareness of AST to more sellers and to potential members

8. Benefits from IP3 Cleared: 55 patent families, >$5M
Obtained reasonable price points
Many unsold assets added deal flow into AST’s normal business
Cost Effective Risk Mitigation
Targets Different Seller Segment
AST: 87% of transactions via brokers, 3-12 month cycle time
IP3: 71% of transactions directly via sellers, 3 month cycle time
Helps sellers to transact their patents with minimum effort
Siphons deal flow from NPEs
Excellent marketing vehicle for AST’s business
Provides expanded deal flow, comps, and market insight
Infrastructure

9. 438 sellers submitted 1,378 patent families to IP3
The Submissions
Submission period: May 25th to June 10th, 2016
Sellers & Brokers were invited to submit their assets at
Over 2,400 visitors to the site with 70% from North America, 15% from Europe
1,378 Total Deals submitted by 434 Patent Owners
1,268 Valid Submission Deals
55 Purchased Deals
110 submissions removed due to:
72 Expired/Lapsed Patents
32 Duplicate or Withdrawn Submissions
6 Invalid patent numbers

10. 434 Patent Owners and 61 Brokers/Intermediaries
Type of Sellers
Out of 1,378 total deals, 697 (52%) deals offered by a Patent Broker or Intermediary and 656 (48%) deals directly by Patent Owners.
434 unique Patent Owners/Sellers
23 owners with 10 or more submissions
297 owners with single submissions
61 Patent Brokers/Intermediaries
186 patent owners represented
Average 11.4 submissions/broker

11. 5% of all reviewed deals were purchased by IP3
Submissions by Technology Categories
Each Deal was assigned one or more of 7 categories by Seller and enhanced by a few changes by AST
16% of all Automotive Deals were purchased
11% of all Communication Deals were purchased
Category
Valid
Deals
Reviewed Deals
Purchased Deals
Purchased as % of Reviewed
Computers and Software
596
513 42 8%
Semiconductor/ Components/ Lighting
392
379 5 1%
Communication
343
283 31
11%
Consumer Electronics
331
291 23
Automotive
101 83 13
16%
Healthcare/Medical 58 47 1 2%
Financial Services 52 2 5%
Total Valid Submissions
1,268
1,110 55

12. Price expectation varied from $700 to $6B
Median Seller’s Price Expectation = $100,000
$123K average price for Brokers Deals (<$1M) vs. $184K when Seller is selling directly
Top 5 Value
Deals
$100,000
292
$50,000
181
$25,000
127
$75,000 92
$150,000 55

13. 55 IP3 Deals Purchased - $10,000 to $325,000
Average Purchase Price for IP3 = $96,071
Price distribution for purchased assets is very similar to all Reviewed Deals
Median purchase price is $75,000
64% of purchased deals are offered directly by Sellers while only 36% from Brokers
87% of AST deals are from Brokers

14. Price Expectation by Technology Category
Deals
Average Price
Median Price
Automotive 90
$196,826
$100,000
Communication
312
$188,407
Computers and Software
545
$170,176
Consumer Electronics
308
$155,145
Financial Services 46
$218,772
$125,000
Healthcare/Medical 50
$168,752
$87,500
Semiconductor/ Components/ Lighting
385
$97,435
$80,000
Total Reviewed Deals
1,175
$152,593
IP3 Purchased Deals 55
$96,071
$75,000
Software and Services assets are generally higher priced compared to Hardware assets

15. What was Purchased?
55 Patent families purchased in IP3 comprising 107 active patent filings
86 US Patents
17 US Applications
2 Great Britain, 1 Germany and 1 French Patents
Average 1.84 US assets per family.
33 with single US patent
12 with two US filings
11 with 3+ US filings
2 with 7 US filings
2 with foreign filings

16. - Number of Transactions and US Assets by Assignment Recording Year -
AST IP Transactions Market Report, Sept Number of transactions has increased in recent years
- Number of Transactions and US Assets by Assignment Recording Year -
AST reassignment analysis as of September 30, 2016

17. - Number of US Assets per Transaction and by Transaction Year -
524 transactions (80% of total) recorded in 2016 have less than 10 assets
- Number of US Assets per Transaction and by Transaction Year -
67% of transactions have < 5 assets
3% of transactions in 2010 were >50 assets Vs. 7% in 2014, 5% in 2016
72% of transactions in 2010 were <5 assets compared to 64% in 2016
AST reassignment analysis as of September 30, 2016

18. - Number of Transactions by Industry Category* -
31% of all 2016 transactions are related to Software compared to 24% in 2015
- Number of Transactions by Industry Category* -
331 transactions (20% of all SW) to Intellectual Ventures
53% transactions to Non-Practicing Entities
73% transactions to Practicing Entities
55% more transactions in 2015 & 2016 compared to 2014
AST reassignment analysis as of September 30, 2016
* One category per transaction

19. - Number of Assets by Transaction Level Category* -
Software (26,335) and Communication (25,159) account for over 48% of all transacted assets
- Number of Assets by Transaction Level Category* -
Rockstar to RPX
2,557
Panasonic to IP Bridge
865
IBM to LinkedIn
801
Ericsson to Optis
808
HP to Samsung
820
Kodak to IV
1,294
HP to Qualcomm
1,426
Ericsson to Unwired Planet
883
IBM to Twitter
943
Freescale to Wi-Lan
1,294
Infineon to Wi-Lan
3,521
Rockstar to Apple
1,169
Nortel to Rockstar
3,918
AOL to Facebook
847
Micron to Round Rock
3,787
IBM to Google
2,156
AST reassignment analysis as of September 30, 2016
* One category per transaction

20. - Transactions by Type of Parties (Jan-Sept 2016) -
NPE purchases are down to 25% of total market in 2016 compared to 50% in 2012
- Transactions by Type of Parties (Jan-Sept 2016) -
Who is selling?
Who is buying?
AST reassignment analysis as of September 30, 2016

21. - Transacted Assets by Type of Parties (Jan-Sept 2016) -
Majority of transacted assets are sold by and purchased by Practicing Entities (PEs)
- Transacted Assets by Type of Parties (Jan-Sept 2016) -
Who is selling?
Who is buying?
AST reassignment analysis as of September 30, 2016

22. For More Information