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Dave’s diverse background in technology includes incubating and scaling an innovation intelligence business that built an intellectual property platform that aggregated over one hundred twenty countries' patent data sets and created advanced citational analytics algorithms that mined concurrent art and un-cited prior art for counter-intelligence, patent litigation and predictive intellectual property trends.

Before joining Corum, Dave was CEO North America for Gaxsys, an eCommerce and logistics company that is a leader in last mile logistics and fulfillment for eCommerce marketplaces. As an executive and entrepreneur, Dave has been operating and investing in companies sitting at the convergence of commerce and eCommerce as well as innovative life science businesses for over 25 years.

Dave has been on both sides of the mergers and acquisitions table, having sold a life science technology company, facilitated sell side and buy side technology transactions and has also scaled multiple technology companies globally in the eCommerce, life sciences and innovation intelligence markets. In the intellectual property space, Dave sits on boards of numerous public and private companies, including one that recently filed for an IPO.

Dave LevineVice President, Corum Group

Moderator

Agenda

• Introduction• Tech Trends M&A Report• Panel• Q&A

Software Patent Luminaries

Elon GasperVice President & Director of

Research, Corum Group

F. David LaRiviereOwner of LaRiviere, Grubman PC

Elon GasperVice President & Director of Research, Corum Group

Software entrepreneur and tech M&A IP specialist Elon Gasper’s own inventions have driven M&A value and underpinned his experience on the sell-side, buy-side and as an advisor and research director at the Corum Group. He founded a software start-up, obtained venture funding and was CEO until its acquisition by the leading public entertainment software company, where he guided patent portfolio work while supporting its growth through further acquisitions and eventual exit in an acquisition by a larger public entity. Elon then helped start and grow a number of other companies. His awards include a COMDEX Envision; a Codie, the retail software 'Oscar'; and eleven patents. He was a finalist for the Fleugelman Award, the only personal achievement award given by the Software Publishers Association, and has held faculty and staff positions at Univ. of Washington, Mich. State, Cal. State, and others. MS, Computer Science; BS, Biochemistry.

Guest Speaker

Patents as an Asset in M&A

• Patents now a business asset• Increasingly driving midrange M&A • Affecting all phases:

– Valuation– Negotiation– Due Diligence

• International increasingly important• Costs

US Patent Apps Claiming “Computer-readable medium”

Source: TAEUS Corporation *US Patent apps claiming “Computer-readable medium”

01 02 03 04 05 06 07 08 09 10 11 12 13

Patents granted for selected software-based technology classes

2011 2012 2013 20140

500

1000

1500

2000

2500

Source: U.S. Patent and Trademark Office, Patent Technology Monitoring Team (2015). Patenting in Technology Classes, Breakout by Geographic Origin (State and Country).

Retrieved from http^//www.uspto.gov/web/offices/ac/ido/oeip/taf/other_sites.htm

Software developmentControl systems

I/O data processing

Virtual machine tasks

Modeling/Simulations

Studies show most software firms haven’t been getting patents…

Sources: James Bessen (Boston University), Stuart Graham et al, NBER Patent Data Project, Crunchbase

24%Pre-packaged Software

1996

20%Computer Services & Software

1996

24%Venture-backed Software Startups

2005

33%Pre-packaged software

2006

24%All Software Startups

2009

67%Venture-backed Software Start-ups

2009

33%All Funded Start-ups

2012

19%E-commerce, Web, & Video Games

2012

Approaches to Value of Patents in M&A

• Study: having a patent assigned to the target increases the deal value by $250,000 on average

• Study: the quantity of patents in a portfolio is secondary to the quality of those patents

• Net present value of established royalty stream• Book value of patent (cost to date)• Assign 25% of operating profits to the patents• Compare to similar patents

Source: Antti Saari, Aalto University

• Purpose and Suitability– Defensive or offensive– Setting out a trail to a marketing objective– Inhibit competitive funding

• Extent of licensing• Evidence of validity• Synergy with rest of portfolio• Structure of transaction

Examples of factors of valuation

Just part of the wireless-related arms race…

Source: PCMag, Verizon

Carefully consider your next move, particularly in terms of exit strategy…

Recent software patent deals across markets

“IP is an increasingly valuable asset class in business…”

- Kevin Rhodes, VP & Chief Intellectual Property Counsel for 3M 

“Patent battles have become a strong catalyst for mergers…”

- James Gleick, historian of science, internet pioneer and author of “The Information: A History, a Theory, a Flood”

InfrastructureConsumer InternetVerticalHorizontal

Consumer Application Software Valuations

Subsector Sales EBITDA Examples

Education 1.54x 14.35x

Entertainment 3.51x 62.51x

Gaming 2.74x 14.15x

Consumer Application Software MarketDeal Spotlight

Sold to

Target: FlexScore [USA]Acquirer: United Capital Financial Advisers [USA]

- Online financial assessment, planning and advisory services

- Broad claims based around ‘quantitatively improving a financial evaluation’

- To be combined with the buyer’s ‘Money Mind” and other evaluative dialogs and games

Patent: Financial evaluation process

Consumer Application Software MarketDeal Spotlight

Sold to

Target: RealDeck [USA]Acquirer: World Poker Fund Holdings [USA]Transaction Value: $15 million

- Online poker gaming software that uses live human dealers and physical cards

- Buyer is tournament operator and producer of reality TV shows such as “Poker Boss”

Patent: Land-based, on-line poker system

Infrastructure Software Valuations

Subsector Sales EBITDA Examples

Endpoint 3.23x 14.93x

IT Services Management 6.20x 27.40x

Network Management 2.29x 19.22x

Security 4.84x 15.42x

Storage & Hosting 2.34x 6.68x

Other 4.32x 13.78x

Infrastructure Software MarketDeal Spotlight

Sold to

Target: Socialware [USA]Acquirer: Proofpoint [USA]Transaction Value: $9 million

- Provides enterprise social media compliance and communications risk management, access control, content archiving, brand protection and social marketing.

- Works at infrastructure level by filtering internet traffic

- Furthers Proofpoint’s Social Media Security and Compliance solution with capture/review capabilities

Patent: Method, system, and storage medium for adaptive monitoring and

filtering traffic to and from social networking sites

Infrastructure Software MarketDeal Spotlight

Sold to

Target: NetBox Blue [USA]Acquirer: Bloomberg [USA]

- Social media filtering, risk assessment, and compliance security SaaS for enterprises.

- Social media monitoring and governance technology to enhance Bloomberg’s enterprise compliance platform.

Patent pending: Unified content scanning and reporting engine

Horizontal Application Software ValuationsSubsector Sales EBITDA Examples

Business Intelligence 3.65x 15.81x

Marketing & Ad Tech 1.94x 16.74x

CRM 1.59x 20.88x

ERP 2.90x 14.25x

Human Resources 6.24x 35.12x

SCM 6.89x 25.88x

Payments 4.13x 16.03x

Other 2.74x 28.33x

Deal Spotlight

Sold to

Target: Appinions [USA]Acquirer: Scribble Technologies [Canada]

- Content marketing analytics SaaS

- Campaign optimization platform applies linguistic analysis to news, blogs, social media posts, scoring top items and influencers

- Patented data science technology slated to enhance Scribble’s content marketing capabilities

Patent: System and method for generating influencer scores

Horizontal Application Software Market

Deal SpotlightHorizontal Application Software Market

Sold to

Target: Lyris [USA]Acquirer: Aurea Software [USA]Transaction Value: $17 million

- Provides email and social media marketing creation, delivery and analytics, and customer engagement SaaS

- Patented ClickTracks technology involves the display of statistical data overlaid on the Website, as well as automatic parameter masking used to define relevant page-identifying URLs

 

Patent: Consolidating web visitor behavior statistics for sales

prospect qualification

Vertical Application Software ValuationsSubsector Sales EBITDA Examples

A/E/C 5.13x 17.25x

Automotive 3.98x 36.54x

Energy & Environment 3.34x 15.78x

Financial Services 4.80x 15.24x

Government 1.75x 12.25x

Healthcare 5.23x 18.31x

Real Estate 7.17x 31.16x

Vertical Other 4.46x 14.83x

Vertical Application Software MarketDeal Spotlight

Sold to

Target: LightHaus Logic [Canada]Acquirer: Envysion [USA]

- Provides video surveillance customer analytics SaaS for retailers

- To expand video analytics capabilities of Envysion’s business intelligence software

Patent: Systems, methods and articles for video analysis

Vertical Application Software MarketDeal Spotlight

Sold to

Target: Yodlee [USA]Acquirer: Envestnet [USA]Transaction Value: $660 million

- Provides personal financial data management and account aggregation SaaS

- Yodlee’s patented data aggregation solutions to strengthen Envestnet’s wealth management platform Patent : Host exchange in bill

paying services

Aug 2015

Subsector Sales EBITDA Examples

Diversified Internet 5.63x 20.00x

eCommerce 1.53x 26.55x

Social Network 7.75x 42.11x

Travel & Leisure 5.25x 25.92x

Internet Valuations

Internet MarketDeal Spotlight

Sold to

Target: Destination RewardsAcquirer: DeluxeTransaction Value: $20.1 million

- Patented rewards and loyalty solution to enhance Deluxe’s suite of Customer Lifecycle Management offerings for financial institutions

- Expanding into Deluxe Rewards, a loyalty program that operates on the foundation of that patented integrated technology platform

Patent : System and method for providing a discount

Internet MarketDeal Spotlight

Sold to

Target: Sidecar Technologies [USA]Acquirer: General Motors [USA]

- Mobile ride-sharing & delivery service

- GM, with its Lyft Alliance, aggressively targeting hot areas in transportation-related tech: car & ride-sharing, autonomous taxis, etc.

- Includes license to potentially seminal patent

Patent : System and method for determining an efficient transportation route

Seminal patent key to GM-Sidecar deal? Filed in 2000 by Sidecar founder; granted in 2002

Sample claim: A computer-implemented method for providing transportation services comprising: 

receiving a transportation request from a passenger; tracking said passenger's position following said

request using positional detection logic; and transmitting positional data identifying said

passenger's position to a pickup vehicle. 

Potential Uber-killer (or Alice roadkill?) 

Elon GasperVice President & Director of Research, Corum GroupSoftware entrepreneur and tech M&A IP specialist Elon Gasper’s own inventions have driven M&A value and underpinned his experience on the sell-side, buy-side and as an advisor and research director at the Corum Group. He founded a software start-up, obtained venture funding and was CEO until its acquisition by the leading public entertainment software company, where he guided patent portfolio work while supporting its growth through further acquisitions and eventual exit in an acquisition by a larger public entity. Elon then helped start and grow a number of other companies. His awards include a COMDEX Envision; a Codie, the retail software 'Oscar‘; and eleven patents. He was a finalist for the Fleugelman Award, the only personal achievement award given by the Software Publishers Association, and has held faculty and staff positions at Univ. of Washington, Mich. State, Cal. State, and others. MS, Computer Science; BS, Biochemistry.

Guest Speaker

F. David LaRiviereOwner, LaRiviere, Grubman PC

F. David La Riviere is the owner of the law firm LaRiviere, Grubman PC, a full-service intellectual property law firm on the legal cutting edge of converging technologies. Prior to his time at LGP, Dave served at IBM, HP, Tomy and other technology firms as both an attorney and engineer. He is a past chair of the Intellectual Property Section of the State Bar of California, and consults and advises clients on all phases of intellectual property matters, including domestic and foreign licensing, validity and infringement opinions; due diligence investigations and reports; technology transfer, disclosure agreements and employer/employee rights and obligations; litigation support, including dispute settlement and arbitration; and preparation, filing and prosecution of applications for domestic and foreign patents and trademark registrations. He holds a J.D. from the University of Santa Clara School of Law, and a B.S.E.E. from Stanford University.

Guest Speaker

Legal protection of intellectual property

Trademarks Copyright Trade Secrets Patents

A) Owning a patentable technology• Provisional application also serves to define your trade secret technology

• If already on the market for more than a year – use trademark registration protection

• Make Improvements

B) Owning a patent application in process• Establish 3 levels of claims strategies:

– broadest possible claim tree, mid-level claims tree, a “picture” claim

• File an RCE / CIP as technology evolves

C) Owning an issued patent• Follow the issued patents with applications on improvements, other embodiments, additional

uses and the like to build a patent portfolio

Legal protection of intellectual property

Provisional Application: Legal considerations

• Defines, describes & prepares claims structure • Holds world-wide “priority”/place in line for 1 year• Does not itself result in a patent, but starts the

process clock• Can take a number of forms• Assignable like other IP rights

Patents

A) Patent:

• Protects inventions

• Invention is a two-step process

– Concept

– Reduction to practice

– However, no practice required

• Protects inventions from infringers

– A negative right

– To exclude others from making, using

selling

• Constitutional Basis

B) Anatomy of a

Patent

• Drawings

• Specification

• Claims

Patenting Software

A) The Trilogy• Gottschalk v. Benson

• Parker v. Flook

• Diamond v. Diehr

B) 33 Years Later• Alice v. CLS Bank

International

Risk Management

• IP Assets are major drivers in M&A activity

• Due diligence absolutely required• Corralling Intellectual Property Asset,

including trade secrets• Protection for valuable IP asset• Pilferage by exiting employees

Dave’s diverse background in technology includes incubating and scaling an innovation intelligence business that built an intellectual property platform that aggregated over one hundred twenty countries' patent data sets and created advanced citational analytics algorithms that mined concurrent art and un-cited prior art for counter-intelligence, patent litigation and predictive intellectual property trends.

Before joining Corum, Dave was CEO North America for Gaxsys, an eCommerce and logistics company that is a leader in last mile logistics and fulfillment for eCommerce marketplaces. As an executive and entrepreneur, Dave has been operating and investing in companies sitting at the convergence of commerce and eCommerce as well as innovative life science businesses for over 25 years.

Dave has been on both sides of the mergers and acquisitions table, having sold a life science technology company, facilitated sell side and buy side technology transactions and has also scaled multiple technology companies globally in the eCommerce, life sciences and innovation intelligence markets. In the intellectual property space, Dave sits on boards of numerous public and private companies, including one that recently filed for an IPO.

Dave LevineVice President, Corum Group

Moderator

Q&AWe welcome your questions!

– Use Q&A window on left side– Submit to queue at any time– If your questions in not answered, we will

attempt to follow up after the event

Q&A

Elon GasperVice President & Director of

Research, Corum Group

F. David LaRiviereOwner,

LaRiviere, Grubman PC

Contact Us

For further information or copies of today’s presentation:

Visit www.wfs.com -or-

Email Dave Levine: davidl@corumgroup.com