Digital Technology & Content Licensing Trends in 2010

And Why We Should Care

Licensing Committee Conference CallCalifornia Bar Association

December 3, 2009

James C. Roberts III, Esq.(in conjunction with Larry Gerbrandt, Media Valuation

Partners)

GLOBAL CAPITAL LAW GROUP PC

GlobalCapital

Summary: Cloudy with Chance of Continued Change (and no meatballs).

1. Continued Weak Economy. 2. The Media Industry: Creative

Destruction. 3. Technology: Platform Changes &

Convergence.4. International: Privacy Matters.5. Hollywood Wants More: Ownership &

SAG, et al.6. Other Legal Matters: Bilski, Patent

Exhaustion, etc.

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1. Continued Weak Economy.• No Rest for the Wicked:

• US economy may be technically in a recovery but employment will not rebound and little money will be available for investments.

• Private equity and venture capital will look elsewhere—e.g., cleantech and biotech.

• Europe and ROW no better off:• Strong Euro will continue to hurt their exports, but

EU is in a big push for broadband uptake and new programming initiatives.

So What?• Probable international M&A activity (Europeans and

Chinese buying US assets).• Probable BK and restructuring and difficult issues of

IP rights.• Multi-platform deals with Europe possible.

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2. The Industry: Creative Destruction.

• Broken Business Model: Fractionating Audiences?• The Cable Model to save the day?• Multi-platform distribution will emerge.• Metrics Matter (Nielsen announcement 12/2/09).• Ad sales still in silos (though changing).• Pay for online/digital content? The new model?

• Big Players: Google, Facebook & Apps• Casual games will continue to grow. Serious gaming may be

mature market. So What?

• Acquisition and contractual license revocation.• Risks of derivative works with new licensees?• Rewrite metrics and rights to data?• App Store may require simpler licenses.• Google Book Settlement a harbinger?• See bold initiatives on paid online/digital content that will work.

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3. Technology: Platform Changes & Convergence.

• Google Chrome OS, Wave, etc.• Faster, cheaper machines (e.g., netbooks) & true

collaboration.• The Cloud.• Apps, the Cloud and Chrome will reduce software

prices.• True Convergence: Multi-platform now

available and in-home convergence on its way, but …• GUI still an impediment to true convergence and

ease-of-use (who really wants to use a remote control to enter text?).

So What?• Do underlying licenses permit multi-platform

distribution?• Do underlying licenses impede Cloud migration?• Impact of Google Chrome on content deals with,

e.g., Microsoft?• Security issues with Cloud? (No.)

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4. International: Privacy Matters.

• EU will continue to strengthen privacy laws & regulations, etc.• Expect transnational application (“across the

Pond”).• EULAs will be scrutinized (much as with FTC).• Trademark and related IP rights clarified (or

muddied).• China will do something about piracy but not

enough.So What?

• Privacy policies and EULAs will have to comply with EU laws and regulations.

• EU trademarks will increase in importance.• If Google book settlement accepted then will conflict

with EU law.

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5. Hollywood Wants More: Ownership & SAG.

• With convergence, Hollywood “model” will be pushed.• “Hollywood owns it all” will be pushed to acquire

technology rights (Hollywood v. Silicon Valley model).

• Downstream/cross-stream Claims of Royalties/Payments?• With multi-platform distribution, will SAG, et al.,

seek payments?So What?

• Expect licensing fights with Hollywood on underlying/developed technology.

• Will claimants file suits v. downstream/cross-stream parties to obtain portions of revenue stream and pressure studios, et al?

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6. Other Legal Matters: Bilski, etc.

• Supreme Court decision could reshape software/Internet revenue models.

• Patent Exhaustion opinions clarifying (and weakening?) downstream licenses?• Recent decisions weaken licensors’ control of

patents in downstream licenses.So What?

• Bilski: Prepare for opinion to go either way. (Not sure what this means for licenses.)

• Ways around limits on licenses from patent exhaustion doctrine?

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Thank You.

James C. Roberts III, Esq.

GLOBAL CAPITAL LAW GROUP PC

GLOBAL CAPITAL STRATEGIC GROUP

jcr@globalcaplaw.com

www.globalcaplaw.com

www.globalcapstrat.com

Copyright 2009, Global Capital Law Group PC. All rights reserved.