Unlocking your Portfolio Value with IP Audits and ManagementGlobal Patent Congress, September 2008

Stephen Trotter, Bob StembridgeIP Consultant CR Manager

AGENDA

• The Scientific business of Thomson Reuters

• IP portfolio management overview– Valuation– Costs– The 4 steps involved in portfolio management strategy

• Break

• The IP Management Roadmap - techniques– New Inventions - IP review panel, strategic scoring system– Own Portfolio - Measurements, technology mapping– Competitors - Users of your technology, IP landscaping– Market Analysis - Non IP data

INTRODUCING THOMSON REUTERS

THE LEADING GLOBAL PROVIDER OF INTELLIGENT INFORMATION TO BUSINESSES AND PROFESSIONALS

INTELLIGENT INFORMATION FOR BUSINESSES AND PROFESSIONALS

THE SCIENTIFIC BUSINESS OF THOMSON REUTERS

ACCELERATING RESEARCH, DISCOVERY AND INNOVATION

OUR MISSION

To create the research platforms and services of the future

to help our customers:

Advance scientific knowledgeDevelop new drugs and get them to market faster

Create and exploit new technologiesAchieve business and personal success

OUR COMMITMENT TO THE CUSTOMER

• Intelligent, accurate and timely information

• Leading edge technology platforms

• Powerful analytical tools and applications

• Intuitive solutions that enable success

Alexandria

SCIENTIFIC’S GLOBAL REACH

PhiladelphiaPortland

Cary

Ann Arbor

Carlsbad

Lisle

San Jose

Rio de Janeiro

Mexico City

London

Paris Munich Beijing

BangaloreHyderabadChennai

TokyoSeoul

Taipei

Singapore

Sydney

SouthfieldCharlottesville

MilanBarcelona

Limerick

SCIENTIFIC MARKETS

• CORPORATE MARKETS Accelerating innovation in high tech industries, including engineering, automotive and aerospace

• ACADEMIC & GOVERNMENT Accelerating research at more than 3,000 research institutions, including national and regional consortia

• PHARMACEUTICAL & CHEMICAL Accelerating discoveryin 98 of the top 100 pharmaceutical companies

• ASIA PACIFIC Accelerating research and innovation through customized solutions for specific geographic markets

IP MANAGEMENT OVERVIEW

• IP Portfolio landscape– Valuation

• Costs– comparison of costs – criteria for maintenance– procedures for portfolio review

• Generating revenues– portfolio management strategy – IP landscape mapping - identifying licensing/sales opportunities

through technology/competitor analysis; techniques, tools and tips– Examples of successful revenue generation

IP PORTFOLIO LANDSCAPE

VALUATION OF INTANGIBLES

Note: S&P 500 Values are the adjusted market capitalizations from the given yearsSource: Ocean Tomo, Ned Davis Research (Jan 2006); World Intellectual Property Organization “WIPO Patent Report 2007”; Standard & Poor’s

PhysicalAssets

IntangibleAssets

PhysicalAssets

IntangibleAssets

PhysicalAssets

IntangibleAssets

PhysicalAssets

IntangibleAssets

1975 1985 1995 2005

$0.5 T $1.5 T $4.6 T $11.3 T

0%

20%

40%

60%

80%

100%

Perc

ent o

f S&P

Mar

ket C

apIntangible Assets

as a Percent of S&P 500 Market Value

$2.3T

$9.0T

PATENTING COSTS

• Preliminary search costs

• Drafting costs

• Filing fees

• Patent office search/examination fees

• Grant fees

• Translation costs

• Maintenance fees

COMPARISON OF PATENTING COSTS

CUMULATIVE LIFETIME PATENT COSTS

0

5,000

10,000

15,000

20,000

25,000

30,000

Year 0

Year 2

Year 4

Year 6

Year 8

Year 1

0

Year 1

2

Year 1

4

Year 1

6

Year 1

8

Year 2

0

Euro

s GBUSEP

CRITERIA FOR MAINTENANCE

– Strategic value in portfolio/cross-licensing– Revenue estimates through production/licensing – Costs– Requires clear understanding of portfolio holdings and

how this fits with corporate strategic objectives

PORTFOLIO ASSESSMENT – WHO SHOULD BE INVOLVED?

• Patent attorney

• Commercial input– product management– business management– marketing/business strategic planning

• Inventor

• Formalities

• Information analyst

IP SERVICES

FAST CURRENT AWARENESS + ORIGINAL DOCUMENTS + FEE PAYMENT SERVICES

POWERFUL PATENT SEARCHING AND PATENT ANALYTICS

IP STRATEGY DEVELOPMENT

WHAT DO I HAVE?

• No. of patents?• Which technologies? • Strengths/weaknesses?• Additional uses?

IP audit

WHAT DO

I NEED?

• Who are competitors?• No. of their patents?• Which technologies? • Strengths/weaknesses?

Gap analysis

ACQUIRE WHAT I NEED

• Build on strengths/ core competencies• Licensing-in opps?• R&D opps?

Investment strategy

DEPLOY WHAT I

DON’T NEED

• Licensing-out opps?• Donation options?• Lapse maintenance?

Deployment strategy

PORTFOLIO MANAGEMENT STRATEGY

1. IP STRATEGY DEVELOPMENT – WHAT DO I HAVE?

WHAT DO I HAVE?

• What patents do I have in my portfolio?• What technologies are they in?• Can I identify my strengths (core competencies)? • Are there any obvious weaknesses?

Powerful patent research and patent analytics…

…The first step to developing an IP strategy

“You are looking at one of Europe’s major research organisations. It has a big portfolio of patents ( more than 15,000 – representing more than 1,700 inventions) that has been filed all over the world. But it has been largely unexploited and so represents a tremendous opportunity”

Joe Zier – President ipValue, regarding BT;

EXAMPLE

T01 Digital computersW04 Audio/visual recording and systemsW02 Broadcasting, radio and line transmission systemsW03 TV and broadcast radio receivers

T01-N Internet and information transfer T01-J Digital computers, data processingW03-A TV ReceiversW02-F Television systemsT01-S Digital computers, Software content

TiVo technology by Manual Codes

0

5

10

15

20

25

30

35

40

45

T01-N T01-J W03-A W02-F T01-S W01-A T01-H W04-B W04-F W04-E

T01-N01 Internet and information transfer, applicationsW02-F10 TV systems, interactive broadcast systems incl. video-on-demandT01-J05 Data processing systems, admin, commerce or info retrievalT01-S03 Software productsW03-A16 Ancillary equipment for cable, satellite or subscription TV

TiVo technology by Manual Codes (6 chr)

0

5

10

15

20

25

30

T01-N

01

W02

-F10

T01-J0

5

T01-S

03

W03

-A16

T01-N

02

W03

-A18

W01

-A06

W04

-F01

W04

-B14

2. IP STRATEGY DEVELOPMENT – WHAT DO I NEED?

The effects of patent litigation go beyond damage payments:• December 2001 - Xerox won a patent infringement case against Palm Inc. and it's former

parent, 3Com Corp.

• Palm's stock price immediately dropped 15 cents to $3.31, while shares of Xerox rose 56 cents to $9.03

WHAT DOI NEED?

Xerox vs. Palm Inc.

Know who your competitors are and what they’re doing

…The second step

• Who are my competitors?• How many patents do they have in their portfolio?• What technology areas are they in?• Where do my competitors’ strengths lie?• Do these pose a threat?

What’s the market like?

EXAMPLE

NormalizationAssignee/Applicant Video on

demand patents

Total patents

%ge of total patents

DIVA SYSTEMS CORP,,,, 32 84 38.095%

UNITED VIDEO PROPERTIES INC,,,, 21 212 9.906%

TIVO INC,,,, 4 56 7.143%

XING INC,,,, 23 1138 2.021%

GEN INSTR CORP,,,, 28 1800 1.556%

HUAWEI TECH CO LTD,,,, 21 2405 0.873%

SK TELECOM CO LTD,,,, 27 5818 0.464%

MICROSOFT CORP,,,, 76 18649 0.408%

LUCENT TECHNOLOGIES INC,,,, 21 13709 0.153%

MATSUSHITA ELECTRIC IND CO LTD,,,, 137 101634 0.135%

NIPPON TELEGRAPH & TELEPHONE,,,, 87 73597 0.118%

KONINKL PHILIPS ELECTRONICS NV,,,, 63 59702 0.106%

SONY CORP,,,, 147 140951 0.104%

IBM,,,, 51 77654 0.066%

TOSHIBA KK 80 246300 0.032%

SAMSUNG ELECTRONICS CO LTD,,,, 56 187218 0.030%

HITACHI LTD,,,, 56 241804 0.023%

NIPPON ELECTRIC CO,,,, 53 233130 0.023%

Geographical considerations

• Where is the market?

• How strongly protected is the technology in that market?

AU BR CA

CN

DE

EP IN

JP

KR MX

TW US

WO

%ge of total VoD patents%ge of total TiVo patents

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Comparison of TiVo vs Video on Demand patent coverage

%ge of total VoD patents%ge of total TiVo patents

US MARKET FOR VoD

US LEGAL STATUS INFORMATION

3. IP STRATEGY DEVELOPMENT – ACQUIRE WHAT I NEED

“There are great opportunities to exploit BT’s technological know-how. Patents plus people often makes a more valuable proposition”

ACQUIRE WHAT I NEED

Mike Carr – Director of Enterprise Venturing, BT Exact

• Increase R&D investment to build on strengths?• Head hunt key inventors to gain competitive advantage?• License-in technology to compensate for areas of weakness?• Where do my competitors’ strengths lie?• Do these pose a threat?• Is there an opportunity to create an alliance?

Action that could lead to growth

Who are TiVo’s key inventors?

G06F Electric digital data processingG11B Information storage on hard diskH04H Broadcast communicationH04L Transmission of digital informationH04N Pictorial communication e.g. Television

G06F Electric digital data processingG07C Time or attendance registersH04J Multiplex communicationH04L Transmission of digital informationH04N Pictorial communication e.g. Television

TIVO & DIVA SYSTEMS COMPARISON

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

G06F

G06T

G11B

H04BH04J

H04L

H04N

TiVo

Diva

TiVo

G06F

G06T

G11B

H04B

H04J

H04L

H04N

Diva

G06FG06T

G11B

H04B

H04J

H04LH04N

H04N - Pictorial communication e.g. TelevisionG06F - Electric digital data processingG11B - Information storage on electromagnetic disk

4. IP STRATEGY DEVELOPMENT – DEPLOY WHAT I DON’T NEED

‘Texas Instruments now derives more than $500 million of licensing revenues from its unused patents’Deloitte & Touche*

‘IBM licensing royalties top $1.7billion accounting for 15% of the company’s profits’

MIT Technology Review - 2000

Source: Implementing a Smart Asset Management Program for your Company’s Intellectual Property - 2001

DEPLOYWHAT I

DON’T NEED

• Can I Identify licensing-out opportunities?• Is there an ideal candidate to donate my technology to? – good PR!• Can I choose to deliberately let my patent maintenance lapse?• Ongoing – will defensive publications be enough to stake my territory?

WHAT DO I HAVE?

ACQUIRE WHAT I NEED

WHAT DOI NEED?

DEPLOY WHAT I

DON’T NEED

IP SERVICES

FAST CURRENT AWARENESS + ORIGINAL DOCUMENTS + IP LAW DEVELOPMENTS

POWERFUL PATENT SEARCHING AND PATENT ANALYTICS

IP STRATEGY DEVELOPMENT

SUMMARY

BREAK