2

Global Platform

Largest law firm in the world with 4,200 lawyers in 30 countries and 76 offices throughout Asia, Europe, the Middle East and the US

1st in M&A deal volume globally

Ranked #1 among the world’s leading global law firms

1st in Venture Capital and Private Equity deal volume

Ranked in the top 5 for US IPOs by US Issuer Adviser

More than 550 DLA Piper lawyers ranked as leaders in their fields

3

Global IP and Technology Practice

More than 400 IP and Technology lawyers – 56 offices in 24 countries

Highly-ranked, full service, global IP practice

Litigation, prosecution and transactions

Patent, trademark, copyright, trade secrets, domain name, Internet, anti-counterfeiting, anti-piracy, privacy

Acquisition, development, licensing, enforcement, technology transfer

Global patent litigation and patent enforcement

Full service law firm advantage – benefit from cross-practice knowledge base

Regulatory and government affairs, litigation, antitrust, etc.

United States

Germany

UK

Netherlands

Italy

Asia

Australia

4

Navigating the New IP World: The Future is Foggy

5

IP Monetization: Shareholder Pressure

Carl Icahn to Motorola Mobility (July 21, 2011)

“patent portfolio, which is substantially larger than Nortel Networks’ and includes numerous patents concerning 4G technologies, has significant value … There may be multiple ways to realize such value given the current heightened market demand for intellectual property in the mobile telecommunications industry”

Starboard Value LP to AOL (Feb 24, 2012): “(i) a significant number of large internet-related technology

companies may be infringing on these patents, and (ii) AOL's patent portfolio could produce in excess of $1 billion of licensing income if appropriately harvested and monetized.  Unfortunately, several of these parties have expressed severe frustration that AOL has been entirely unresponsive to their proposals regarding ways to take advantage of this underutilized asset”

6

IP Monetization

AOL Patent Sale: Value Difficult to Predict

$1.1 billion from Microsoft Microsoft resells 650 patents (approx) to Facebook for $550M

M-Cam Estimate (March 29): $290M

Copyright

US Copyright Group

Righthaven LLC

Trademark

Liz Claiborne: $200M secured financing

Tupperware: $400M secured financing

7

Patent Sales

2010 - 2012 Patent Sales

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Craig Opperman, DLA Piper

8

It Could Be Worse

Average US Patent is worth $50k to $75k

And that’s the average

9

No, It’s Not Number of Patents

Patent Sales: 2010 to 2012

$1,05BN

$550M

$39,5M

$2,38BN

$4,5 BN

$3 BN

$12,5 BN $75M

$120M

$60M

$11M

$-

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- 5,000 10,000 15,000 20,000

# of Patent Properties on X-axis/ Bubble Size = Transaction Size

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Craig Opperman, DLA Piper

10

2010 - 2012 Patent Sales

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Craig Opperman, DLA Piper

Buyers Drive Price …

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strategic

11

Forms of Monetization

Monetization of IP Royalty/Revenue Streams

IP Rights Monetization

Monetization and Financing of Content and Technology

12

Why Companies Care: Top Ten Damage Awards (1995-2010)(PWC Patent Litigation Report)

13

Currently 62 ITC investigations pending

ITC investigations have increased 11% annually since 1996, and 18% since 2003

Patent related lawsuits have nearly doubled in the past 15 years, at an annual compounded growth rate of 4.3%

~2.5x increase in U.S. patent applications since 1996 at an annual compounded growth rate of 6.7%

Patent applications have increased 3% annually since 1996, led by the U.S., Japan and Germany

Source: World Intellectual Property Organization.

Note: 2009 & 2010 patents issued not available.

Source: U.S. Courts; Director’s Annual Reports.

Source: U.S. International Trade Commission.

18% increase in 2010

81% increase in 2010

N.A.

ANNUAL GLOBAL PATENT APPLICATIONS AND PATENTS ISSUED

ANNUAL US PATENT APPLICATIONS AND PATENTS ISSUED

ITC SECTION 337 INVESTIGATIONS FILED ANNUALLY

US PATENT LAWSUITS FILED ANNUALLY

Source: U.S. Patent and Trademark Office.

PATENT APPLICATIONS PATENT LAWSUITS & INVESTIGATIONS

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Rapid Growth in Patent Applications and IP Lawsuits (Lazard)

14

Why Companies Care: SmartPhone Litigation

15

Avistar

Public company in Unified Communications 50 patents

VOIP, IM, Video conferencing Pre dated ICQ (original instant messaging company)

Valuation vs. reality Ocean Tomo: Estimated net present value $300-500M (March 26,

2008)

Sold to IV for $11M (and $3M license to eBay/Skype) Spun out to Pragmatus and suing Facebook/LinkedIn/Google

Problems Patents put into re examination by Microsoft

Company lacked cash

Failure to exploit aggressively

16

IP M&A: The History of Asset Sales

Nortel: $4.5 Billion (Apple, Ericsson, EMC, Microsoft, RIM & Sony)

6,000 patents

AOL: $1.1 Billion (Microsoft) (resale of 650 patents to Facebook for $550M)

Astella Posidion: $609 Million (Royal Pharma)

DPP IV patents

Novell: $450 Million (Microsoft, Apple, EMC & Oracle)

882 patents

RealNetworks: $120 Million (Intel)

190 patents/170 patent applications (codec development team)

Friendster $40 Million (Facebook)

18 patents

Unova: $24 Million (Broadcom)

150 patents/patent applications

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Company Based M&A IP Transactions

Target Acquiror Price

Motorola Google $12.5 Billion

Sirna Therapeutics Merck $466.2 Million

($1.035 B total)

Mosaid Sterling Partners $590 Million

Intertrust Sony/Philips $453 Million

Cryptography Research Rambus $343 Million

S3 Graphics HTC $300 Million

18

Patent Sale Myths

Less (information) is more

Lack of necessary information will get your transaction tossed to the end of the line so provide all of the information requested

Force a tight decision timeline to create multiple offers

A short decision timeframe means more corporate buyers are likely to exit the process. Understand your buyers process and decision timeline

There are no comparables so pick a high price

Information transparency has arrived. Comparables exist and Buyers are using them

19

Patent Sale Myths

Never reveal encumbrances

See point #1. Would you buy a house without an inspection? Enough said

Take lots of liberties with the truth

Deals get done based upon relationships and credibility. Questions about either will slow or crater a deal

500+ patents in a transaction will net a higher price

Maybe … but more likely the Buyer will pick the top ten and discount the rest (and the price)

20

Due Diligence

Critical Issues

Chain of title

Licenses

Covenants not to sue/immunity

Liens (may be covered by bank or other security interests)

Foreign issues

Potential fraud on patent office

Past behavior

Future assistance

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Due Diligence

Goal: Disclosure of all prior relevant documents

Assignments in the chain of title

Licenses

Covenants not to sue

Liens or other encumbrances

Prosecution files

In some cases, full disclosure by seller is impractical or impossible so representations and contract remedies will be critical become important

22

Representations

Representations widely vary and price will be a factor

Seller prefers “AS IS”

Critical buyer issues: Ownership

Licenses, covenants not to compete, liens and encumbrances

Prosecution history (e.g., no fraud committed on any patent office), no terminal disclaimers

No pending or threatened lawsuits, interference proceedings, etc.

No government funds used

Validity/enforceability

RAND obligations to standard bodies

No patents or applications that are ‘related’ to the transferred patents exist

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Less Critical Buyer Issues

Other Buyer issues

Return of ownership rights in the future

Future assistance in lawsuits

Terminal disclaimer

Inventor payments

Future assistance in prosecution

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Assignment

Assignment language needs to include all patents/patent applications and other matters that should be assigned

Are there pending applications?

Counterparts filed in other countries?

A right to file applications in other countries?

Include right to bring suit and recover for past infringement as well as future infringement

Consider including future rights that the seller may acquire with the patents and applications

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Continuing Obligations

Buyer

Potential license back to seller

Limit on enforcement

Indemnification

Seller

Assistance in perfecting rights

Assistance on prosecution during transition period

Payment of maintenance and prosecution fees coming due for transition period

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Licensing Program

IBM Program Started in early 1990s

Revenues of over $1 Billion per year

Budgets for each division

Licenses of software, trade secrets as well as patents

Rambus Public company

Licenses semiconductor patents

MPEG LA Licenses patents from multiple companies for certain digital music

standards

Move to third party organizations

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IPXI: New Options for Monetization

IP Market Problem IP Exchange ResultIncomplete or insufficient market information

Detailed prospectus, published pricing, consumption data reporting, bid/ask

TRANSPARENCY - enabling more efficient IP asset management and R&D decisions

Arbitrary or unilaterally determined IP value

Market-based pricing reflecting the value of a technology and increasing buy-side confidence

PRICE DISCOVERY – ensuring fair and reasonable pricing

Lack of standards, including course of dealing, contract terms, and pricing

Standardized tradable license rights accessible to all market participants

LEVEL PLAYING FIELD – accelerating technology transfer and innovation

Time and transaction cost inefficiencies associated with bilateral licensing

Central marketplace with market enhancing solutions, such as standard contracts, outsourced auditing, and alternative dispute resolution processes

EFFICIENCY - providing easy access, liquidity, and increasing transaction volume

A more efficient and transparent IP marketplace

28

IPXI Status Update

In December of 2011, IPXI completed a $10 million funding round by a group of U.S. and European investors including CBOE Holdings, Inc. (Nasdaq: CBOE), the world’s largest options exchange, and Royal Philips Electronics (Philips)

IPXI has received commitments to sponsor ULR Contracts with an aggregate target market value of $300+ million, and is reviewing many other submissions

IPXI will begin trading of ULR Contracts in 2012

IPXI is partnering with regional government and strategic partners to establish support in building IPXI model in multiple jurisdictions around the world

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IP Strategy Economics: IPXI vs. Other Monetization Methods

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Failed IP Asset Strategy: SCO & Linux

Copyright claim based on use UNIX code in Linux

Lawsuits

SCO v. IBM

SCO v. Autozone

SCO v. DaimlerChrysler

SCO v. Novell

SCO is bankrupt after spending over $80M

Fundamental mistake

Failure to confirm title

Selecting IBM as defendant

31

Monetizing IP Royalties: History

Music and Film Royalties

Bowie Bonds – backed by revenues from David Bowie music catalogue – rate A3 by Moody’s – closed in 1997

Four additional music copyright deals closed in 1998 with same rating

DreamWorks -- $1 Billion revolving credit facility backed by 36 film properties – closed in 2003

Village Roadshow Films -- $900 million facility backed by 27 films – wrapped by MBIA – closed in 2004

Universal Film Funding -- $950 million facility backed by 125 films of Vivendi Universal – wrapped by Ambac – closed in 2004

32

Royalty Streams Monetization

Drug Royalty LP 1--Series 2012-1--

• Total securities issued--$195 million• BBB rated • Term bonds maturing in 2024• Sponsor is Drug Royalty Corp. Inc (DRI), a Canadian privately held investment management company focused on the health care

industry• DRI business model is to purchase royalty assets (either in whole or an undivided interest) in commercialized pharmaceutical

products from inventors, universities, hospitals, biotech firms, pharmaceutical companies and other parties who own royalty interests in pharma products

• Collateral for this transaction consisted of 18 royalty streams on 14 patent-protected drugs and technologies

Domino's Pizza Master Issuer LLC--Series 2012-1--

• Total securities issued--$1.675 billion• Expected final maturity--2019• Legal final maturity--2042• Rated BBB+• Collateral securing bonds consists of franchise royalty and license payments, Domino's intellectual property and profit from

distribution arrangements• The IP collateral is held by Domino's IP Holder LLC, a bankruptcy-remote special purpose entity which is wholly owned by the issuer

of the bonds. The IP Holder holds all the Domino's IP and licenses it to the issuer and various other domestic and international affiliates

Miramax LLC--Series 2011-1

• Total securities issued--$550 million• Senior securities ($400M) rated BBB and subordinated securities ($150M) rated BB• Collateral consists of rights to IP (including distribution rights) and film materials relating to a portfolio of 700 films and 14 TV series,

mini-series and specials, and shorts, plus rights in over 240 books and 300 development projects• Most films are older, seasoned films • Legal final maturity--2021

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Royalty Streams Monetization

Major pause in the market

Few recent deals

Recent Patent Financing Deals

Astella Poseidon: $609M

Stereotaxis: $40M

Recent Trademark Financing Deals

Liz Claiborne: $200M

Tupperware: $400M

34

Summary

IP Strategy and Assets: New Focus of C Suite

Dynamic market, but still early

Kodak Bankruptcy

Trident Bankruptcy

Moving to private companies

Friendster

WOWD

Increase in options for exploitation

RPX

Open Source Model: Hortonworks spinout from Yahoo

IPXI

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Questions?

Thank You