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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 amickelsen@mwe.com Chris Bright Partner, McDermott Will & Emery LLP cbright@mwe.com

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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

  • Andrew Mickelsen

    • Partner, McDermott Will & Emery LLP

    • amickelsen@mwe.com

  • Chris Bright

    • Partner, McDermott Will & Emery LLP

    • cbright@mwe.com

  • Melissa Alexander

    • Associate General Counsel, Clinipace Worldwide

    • malexander@clinipace.com



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