Advanced Licensing: Patent Assertion in A Licensing Context

1. Advanced Licensing:Patent Assertion in A Licensing Context Howard Skaist Managing Attorney Berkeley Law & Technology Group, LLC June 17, 2005

2. IP Game has Changed:Patents Have “Teeth” • Design Freedom not as important • Explosion of technology/capital spending (eg, the information age) • Fed Cir (1982) • Growth of “IP businesses” • Patent Reform??

3. Need A Strategy • Goal to align business and patent strategy • Two main uses for patents: • Defend your turf • Collect a toll • In what form? • Cross-license • Cash • Equity • Joint business arrangements • Other?

4. Need A Strategy • Only a few choices – enforcement or licensing • Strategies can vary with business or technology • Who is entering your business? Whose business are you entering? Who represents non-competitive IP threats? • Strategy should drive execution • Portfolio management • Patent filing • Claim drafting • Patent acquisitions/divestitures • Consider selling non-core IP to finance licensing program • Your Strategy will change and evolve • Keep that in mind

5. Zero Sum Game • Leveraging Portfolio is Zero-Sum Game – whether in licensing or litigation • Non-assertion permits others to infringe without paying • End game of litigation is licensing (unless can litigate forever) • Important consideration - relative change in IP strength versus IP exposure over time

6. Licensing Approach • Licensing today is a mixture of: • Charm based licensing • Fear based licensing • Fact based licensing • Today, most potential “licensees” will not pay without both a demonstration of infringement and an intention to enforce • This means building convincing patent case without litigation/discovery • Rest of presentation – execution

7. Target Selection is Critical • More than simply determining who is infringing • Set of factors must be considered: • Target’s exposure; your exposure • Target’s resolve; your resolve • Target’s history of licensing and litigation • Relationship between you and target (e.g., customer/supplier/competitor) • Environmental factors can be as or more important than overall quality of patent case

8. Building Team is also Critical • Building patent case requires experts in business, technology and law • Does this talent exist in-house? • Have any members has done previously? • Are any members familiar with portfolio? • Is decision-maker/team leader objectively able to evaluate strengths/weaknesses of case? • How does uncertainty impact?

9. The Objective and The Dance • The objective - demonstrate patent imbalance • Your patents cover more of their revenue than their patents cover of your revenue • Avoid MAD situations • The Dance • My patents are red hot - Yours are diddly-squat • No one admits infringement or invalidity – this does not mean deal cannot be struck

10. Step One: Mining the Portfolio • Mining Your Portfolio is important • Must have or acquire this knowledge – various ways • Triage approach – three vectors – annual evaluation • likelihood of infringement • ease of detection • ease of design around • Inherently subjective – good experts are key • Claim construction is central • PTO class codes are a place to start • Capture knowledge • Although discovery-related issues exist

11. Step Two: Knowledge of Accused Product/Technology • Product/Technology Knowledge is also important • Party asserting has disadvantage • Target knows how their product works • Avoid taking positions that may later undermine your case (e.g., due to prior art or a mistake in how the product works) • Can be esp. tricky when responding to opponent’s positions • Distinguish between past, present and future • Current infringement gets the attention • Focus on key products • Reverse engineering is expensive, but sometimes necessary; exploit other resources first

12. Step Three: Presenting the Case • Presenting case is critical – litigation without court rules • Credibility is a resource not to be wasted • Avoid weak assertions or ridiculous positions • Know about the decision maker • Usually not a lawyer • Presentation should be directed to this individual or set of individuals • Stay focused on big picture • Concede on minor points • Listen carefully; show respect; appear reasonable • However, good cop; bad cop can work if carefully orchestrated • Must ultimately appear reasonable for escalation path

13. Example Assertion:US Patent 7,000,000 Claim 1: An integrated circuit comprising: side elements A; top element C; chip element D; and connection elements B.

14. Example Assertion:US Patent 7,000,000 Elements A Element B Elements D Element C