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MANAGING PATENT PORTFOLIOS TO MAXIMIZE THEIR VALUE. January 29, 2014 Anaheim, California Sponsored by McDermott Will & Emery LLP. #IHCC12. Panelists. Andrew Mickelsen Partner, McDermott Will & Emery LLP [email protected] Chris Bright Partner, McDermott Will & Emery LLP [email protected]

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managing patent portfolios to maximize their value

MANAGING PATENT PORTFOLIOSTO MAXIMIZE THEIR VALUE

January 29, 2014

Anaheim, California

Sponsored by McDermott Will & Emery LLP

#IHCC12

panelists
Panelists
portfolio acquisitions
Portfolio Acquisitions
  • 580 MIPS patent assets - $350 million
  • 1,100 Kodak patent assets - $527 million
  • 800 AOL patent assets - $1 billion
  • 6,000 Nortel patent assets - $4.5 billion
  • 24,500 Motorola patent assets - $5.5 billion
portfolio value
Portfolio Value
  • Barrier to entry
    • The right to exclude others from making, using or selling an invention
  • Competitive edge
    • Marketing patented or patent-pending products and services
  • Offensive tool
    • Licensing and litigation
  • Defensive tool
    • Freedom to operate and litigation counterclaims
  • Cross licensing
proactive management
Proactive Management
  • Take stock of portfolio
    • Inventory
    • Categorization
  • Define objectives
    • Multiple perspectives
  • Align portfolio activity with objectives
    • Development
    • Maintenance
    • Divestiture
    • Enforcement
inventory portfolio
Inventory Portfolio
  • Status
    • Pending
    • Issued
    • Maintenance fees
  • Ownership
    • Assignment of rights
  • Content
    • Claimed
    • Described
categorize portfolio
Categorize Portfolio
  • Technology
    • Mature
    • Active
    • Strategic
    • Key words
  • Competitors
    • Competing products
    • Competing solutions
  • Other industries
define objectives
Define Objectives
  • Strategic objectives
    • Support product development
    • Enhance marketing of company and products
    • Monetization is not the only source of value
  • Financial objectives
    • Reduce/reallocate costs
    • Generate revenue
  • Management education and buy-in
    • Company, marketing, R&D, etc.
portfolio development
Portfolio Development
  • New applications
    • Aligned with key product areas
    • Invention harvesting
    • Quantity vs. quality
  • Continuation application strategy
  • Balance between validity and infringement during prosecution
  • Foreign filing
    • Reevaluate jurisdictions
    • Reevaluate filing criteria
portfolio maintenance
Portfolio Maintenance
  • Milestone decision points
    • Office actions
    • Allowance
    • Maintenance fees
  • Keep objectives in mind
    • Use business, technical and legal input
  • Update objectives and categorization as company evolves
portfolio divestiture
Portfolio Divestiture
  • New and growing markets
  • Spectrum of divestiture options
  • Market value factors
  • Risks and risk mitigation
patent markets
Patent Markets
  • Competitors
  • Other industries
  • Defensive patent aggregators
  • Patent assertion entities
  • Patent exchanges
divestiture options
Divestiture Options
  • Sales/assignments
  • Licenses
    • Exclusive
    • Non-exclusive
  • Limitations
    • Geographic
    • Duration
    • Field of use
  • Align with objectives and markets
market value factors
Market Value Factors
  • Applicability
  • Blocking patents
  • The life of the patent and license
  • Established licensing royalties
  • Comparable licensing rates
  • Derivative or convoyed sales
  • Profitability
  • Others
divestiture issues
Divestiture Issues
  • Markets tend to be inefficient and lack transparency
    • Difficult to define market for inherently unique assets
    • Transaction costs may exceed fair market value for any particular asset
  • Unintended consequences
    • Impact on overall business
    • Public perception of divestiture activity
  • Increased likelihood of litigation
risk mitigation
Risk Mitigation
  • Prioritize objectives and allocate due diligence resources accordingly
    • Validity, infringement, freedom to operate
  • Strategically group assets
    • Focus on target, technology, industry, etc.
    • Consider including trade secrets / technical know-how
  • Utilize Patent Office procedures
    • Re-exam, post grant review, supplemental examination
  • Nurture successful assets
    • Successful track records tend to increase valuation
manage expectations
Manage Expectations
  • Valuation
  • Timeframe
  • Internal resource requirements
  • Public perception
  • Post-license activity
  • Litigation risk
enforcement goals
Enforcement Goals
  • Defensive or offensive
  • If defensive: cross-licensing or other business deal
  • If offensive: injunction or money
  • If injunction
  • If money
    • Patent markets
    • Market value factors
    • Licensing and litigation program
licensing meeting
Licensing Meeting
  • Infringement claim charts
  • Claim construction
  • Validity
  • Damages (financial) model
    • Lost profits
    • Reasonable royalty
  • Injunction
  • Declaratory judgment risk
  • Fed. R. Evid. 408
litigation resources
Litigation Resources
  • Attorney Fee Arrangements
    • Contingency
    • Hourly
    • Fixed fee
    • Success fee
    • Litigation financing
  • Costs
  • Other considerations
    • Inter Parties Review and other Patent Office procedures
    • Counterclaims and countersuits
litigation preparation
Litigation Preparation
  • Ready to try the case
  • Theme(s) from the outset
  • Company and invention story
  • Key company witnesses
  • Key company documents
  • Preserve documents
  • Protect the attorney-client privilege
  • Litigation counsel support
take away points
Take-Away Points
  • Identify and obtain buy-in of business objectives
  • Proactively align portfolio with business objectives
  • Realistically assess the financial potential
  • Prepare for the possibility of litigation
  • Manage expectations
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