1. ASTECS Copyrighted materials. All rights reserved. Selling Your Patent

2. © Source: Knowledgebase at www.astecs.org Agenda Schedule 9-12:00 noon 10.30-10.45—Break Introductions Why Patents are Sold Who’s Selling Patents? Why Patents are Acquired Why Buy a Patent? Information Required in the Patent Sale Process Selecting Patents to Acquire or Sell-- Andre Marais Valuation—What’s a Patent Worth? Patent Licensing Typical Tech-License Arrangement Corporate IP Licensing Role of Intermediaries in the Patent Sale Process Alternative Sales Channels/Options Why Buyers Use Intermediaries Why Sellers Use Intermediaries Timeline—Patent Sale Q & A

3. © Source: Knowledgebase at www.astecs.org What is a Patent? The right to exclude, not right to use. You Do not Have the Rights to Use your own patented invention. As Elements of your invention may infringe other patents.

4. ASTECS Copyrighted materials. All rights reserved. Why Patents are Sold

5. © Source: Knowledgebase at www.astecs.org Most Patents are Unused

6. © Source: Knowledgebase at www.astecs.org Why are Patent Unused? They’re in the hands of individuals and organizations that don’t have the channels to market them. Entrepreneurs Universities Research Labs Corp. R&D Patents Inventions Market Channel

7. © Source: Knowledgebase at www.astecs.org Channel Barrier for Startups

8. © Source: Knowledgebase at www.astecs.org One Technology—Many Applications One technology Multiple applications Different markets New routes to market

9. © Source: Knowledgebase at www.astecs.org Who’s Selling Patents? Startup Companies Funding dried up Liquidating assets Unable to build channels Large Corporations No longer core to business Divesting of business/unit Research Labs and Universities University Licensing Groups Unused Not core Global phenomenon U.S. patents being sold from many countries

10. ASTECS Copyrighted materials. All rights reserved. Why Patents are Acquired

11. © Source: Knowledgebase at www.astecs.org Why Buy a Patent? Exclude competitors. Barriers to entry. Enter new markets with mitigated risk of infringement litigation. Enforce against infringers. Generate licensing revenue. Accumulate ‘arms’ for potential patent wars.

12. © Source: Knowledgebase at www.astecs.org Patent Buyers Product manufacturers & marketers Buy rights to exclude competition from producing similar products Many manufacturers in Asia Patent enforcers Buy patents that are infringed Corporate defenders Build portfolio to protect against infringement suits Buy through third party aggregators Financial investors Buy patents with licensing revenue streams

13. ASTECS Copyrighted materials. All rights reserved. Information Required in the Patent Sale Process

14. © Source: Knowledgebase at www.astecs.org Information Needed to Sell Patent numbers. Pricing guidelines. Information on prior-sales efforts. Reasons for sale? Family of international counterparts? Sell as portfolio or individual patents? License back required? Potential infringers? Current licensees? Marketing materials? Additional IP included in sale?

15. © Source: Knowledgebase at www.astecs.org Due Diligence Information Patent office File Wrappers. Correspondence with patent office. Prior art research.

16. © Source: Knowledgebase at www.astecs.org Documents Needed to Sell Brokering/representation agreement. Anti-circumvention. NDA for Buyers. Patent Purchase Agreement. USPTO Assignment.

17. ASTECS Copyrighted materials. All rights reserved. Selecting Patents to Acquire or Sell..Including Patent Analysis, Portfolio Strategy and the Role of Patent Attorneys. Andre Marais, SLW

18. ASTECS Copyrighted materials. All rights reserved. Valuation—What’s a Patent Worth?

19. © Source: Knowledgebase at www.astecs.org What to Expect: Valuation Patent invalidated or expired Known infringers $0 $10k-30k $30k-100k Patent Acquisition Value in US$ $100k-$0.5m $0.5-1m $1m+ A B C D E Not litigated No licensees No broad claims Not litigated Broad claims Large market Several competing buyers Fortune 500 infringers F Litigated & won Pending (unissued) patent applications: value is triggered when patent is approved. Value is contingent on approval. Industry-standard

20. © Source: Knowledgebase at www.astecs.org Which Country? Patents are country-specific. U.S. patent is only enforceable in U.S. Chinese patent only enforceable in China. U.S. patents are most valuable. Many buyers only interested in U.S. patents. Difficult to sell patents from other countries unless they are part of portfolio with U.S. counterparts.

21. © Source: Knowledgebase at www.astecs.org Selling Patent-Pending Applications? Value highly speculative until patent is approved: If not approved, then worth nothing. If approved with weakened claims, then value can be reduced. Two step sale: 1.Sell option to buy the patent when approved. 2.Approval triggers acquisition at pre-set price.

22. ASTECS Copyrighted materials. All rights reserved. Patent Licensing

23. © Source: Knowledgebase at www.astecs.org The ‘IBM Effect” IBM is reported to have generated over $10bn in licensing royalties in the 10 years from 1993 More than 90% reaches bottom line

24. © Source: Knowledgebase at www.astecs.org Solutions Model

25. © Source: Knowledgebase at www.astecs.org Solution Solving Model

26. © Source: Knowledgebase at www.astecs.org Typical Tech-License Arrangement License Scope Field of Use Non-competitive Exclusive/Non Exclusive Term License Fee $0.25m-$5m Paid up-front Royalty 3.5% of Revenues Quarterly/annually Issues Enforcement against unlicensed “infringers”

27. © Source: Knowledgebase at www.astecs.org Enforcement-Based Licensing You’re infringing our patent. Would you like to take a license? Of course, we could bring a suit for infringement if you don’t license!

28. © Source: Knowledgebase at www.astecs.org eBay Case and Other Trends Injunctions now less of a threat. Declaws some of the patent enforcers. Rapid Changes. More patent cases reaching U.S. Supreme Court.

29. © Source: Knowledgebase at www.astecs.org Opening Up their Portfolios IBM Microsoft Hewlett Packard NEC Xerox Delphi Nortel Honeywell Dupont

30. © Source: Knowledgebase at www.astecs.org Corporate IP Licensing—Getting Started 1. Catalog IP Evaluate and organize patent portfolio Identify most valuable assets Prepare listings 2. Publish Catalog Release catalog online 3. Syndicate Listings Through Tynax & broker network 4. Respond to Inquiries 5. Approach Target Buyers

31. © Source: Knowledgebase at www.astecs.org Licensing Enforcement Rights Universities, Research Labs and others are Selling Title to their Patents This can impede their ability to maximize licensing revenue from their portfolios. The following structure allows licensees to take enforcement rights: 1.Exclusive License. 2.Right to enforce. 3.Indemnification.

32. ASTECS Copyrighted materials. All rights reserved. Role of Intermediaries

33. © Source: Knowledgebase at www.astecs.org Alternative Sales Channels/Options Appoint Broker Pros: Reach active buyers. Cons: Reach is usually limited. Direct sale Pros: No commissions to pay. Cons: Difficult to find active buyers. Many won’t deal directly. Litigation fear. Auction Pros: Deadline to sale. Cons: Limited reach. Buyers want time for due diligence. Broker network/exchange Pros: Wide reach. Cons: Paying commissions?

34. © Source: Knowledgebase at www.astecs.org Why Buyers Use Intermediaries Litigation & anonymity. Avoid infringement litigation. “You’re a potential infringer if you’re a potential buyer!” Pricing. Avoid price inflation based on the deep pockets of the buyer. Specialized capabilities. Patent search tools and analysis techniques. Extended Reach. Leverage the broker’s channels and connections.

35. © Source: Knowledgebase at www.astecs.org Why Sellers Use Intermediaries Litigation. Avoid declaratory judgment lawsuits. Potential infringers bring such suits to prevent venue being set in Texas. Pricing. Reach a wider audience of potential buyers. Create an auction- environment. Facilitating the Transaction. Expertise in closing these transactions.

36. © Source: Knowledgebase at www.astecs.org Market Before Tynax

37. © Source: Knowledgebase at www.astecs.org Tynax Exchange

38. © Source: Knowledgebase at www.astecs.org Unique Trading System

39. © Source: Knowledgebase at www.astecs.org Active Lead Generation

40. © Source: Knowledgebase at www.astecs.org Timeline—Patent Sale

41. ASTECS Copyrighted materials. All rights reserved. Q & A