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Navigating the Evolving Patent Market Landscape: Insights and Strategies

Explore the complexities of the patent market, from defensive and offensive value to strategic and enterprise implications. Learn about recent high-visibility patent sales and IP-driven M&A transactions, and understand the different levels of IP value. Discover how patents drive innovation and competitiveness, influencing pricing, market share, and the overall success of enterprises. Gain insights into leveraging patents for revenue enhancement, cost reduction, and strategic positioning in today's dynamic market environment.

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Navigating the Evolving Patent Market Landscape: Insights and Strategies

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  1. What’s Driving the Current Patent Market--Where Are We and Where Are We Going? Ron Laurie Inflexion Point Strategy IEOR 190G - Patent Engineering U.C. Berkeley College of Engineering April 9. 2012

  2. What’s Driving Patent Markets? Supra-Normal Returns on Enforcement Royalty Base (Tax Base) – License/Litigation Tangible Products $$c Market (Price) Marketing, Sales, Admin, etc. Digital Products (Proprietary Design Info) Product (Cost) $$b Design Core Technology $$a Core Technology: Patented Inventions & Unpatented Know-How Patent on Invention X X Invention X Integration Technology Productization Technology (Patented and/or Unpatented) Royalty Payments (Tax) - $$ Innovation 1

  3. What’s Driving Patent Markets? Transition from Direct Financial Return to Strategic Value Level 1 - Offensive Value Level 2 - Defensive Value ------------------------- Level 3 - Strategic Value Level 4 - Enterprise Value 2

  4. Level One - Offensive IP Value Top-Line Revenue Enhancement via Out-Licensing or Sale -- • Non-exclusive patent licensing (stick model) • Non-exclusive patent licensing plus tech transfer (carrot model) • Exclusive field-of-use licensing in non-core markets - with or without technology transfer • Cross-licensing with receipt of balancing payment • Sale - with or without grant-back license or reservation of rights 3

  5. Level Two - Defensive IP Value Bottom-Line Improvement via Cost Reduction In terms of IP Cash Outflows via -- • License Fees, • Litigation Expense • Infringement Damages • Design-Around Efforts > Freedom to Operate - deterrence or settlement of competitor IP Infringement claims > Cross-licensing with zero or lower net balancing payment > Exclusive field-of-use licensing in non-core markets - with or without technology transfer > Participation in defensive aggregation consortia 4

  6. Level Three - Strategic (Market-Related) IP Value • Price Premium for Products/Services with Patented Features -- depends on demand for patented feature, i.e., price cross-elasticity Licensing (Level One  Revenue Enhancement) vs. Exclusion (Level Three  “Feature Wars”) • Market Share Protection/Expansion -- measurement issues 5

  7. Level Four - Enterprise IP Value Using patents -- > to increase acquisition value in an M&A transaction e.g., HP  Palm, Google  Moto > to increase issue price in IPO e.g., Priceline > in lieu of cash as contribution to JV or strategic alliance > to increase/support public company share price 6

  8. Recent High-Visibility Patent Sales & IP-Driven M&A Transactions (cont.) 7

  9. Recent High-Visibility Patent Sales & IP-Driven M&A Transactions 8

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