Patents and Intellectual PropertyStrategy / Protection/ Valuation

Recent sales of patent portfolios for billions of dollars are leading executives to revisit potential dormant value.

With visible portfolio valuations such as Nortel and Motorola IP making headline news, the value of Intellectual Property has never been higher than in today's

economy. As a result, Product Managers are now being challenged with understanding basic patent protection, strategy and valuation.

BCTIA - Product Management Group – Oct 25, 2011 - Facilitator

Derek Pettingale – Regional Product Marketing Manager Schneider Electric - Renewable Energies

The goal of the Product Management Group is to promote and enhance the profession of Product Management in BC’s technology industry. The BCTIA with Members of the Product Management Group work collaboratively to:

• Promote Product Management as a recognized discipline • Encourage the sharing of best practices in a non-competitive environment • Provide networking and peer building opportunities for product managers

Product Management Group events are open to product managers, product marketing managers or those responsible for product management in their organization. Attendees must work for a BC based technology company in any technology sector, whose core business is the development and/or distribution of technology-based products or services.

Product Management Group Advisory Committee:

Derek Pettingale, Product Marketing Manager APAC - Schneider Electric Renewable Energies

Edna Menon, Product Management ConsultantHelen Goddard - Rockfern Consulting Inc. Nenad Furtula, VP Product Management - Bluestream SoftwareStewart Rogers - ACL Services

Connect with the BCTIA and your PMG Peer Group through LinkedIn Groups.

Coming Feb 2012

Open Call for Organizing Volunteers and Sponsors…

See me afterward.

Next Event - Nov 8, 2011

Secrets of a Successful Product LaunchDavid Daniels from Pragmatic Marketing and creator of Pragmatic Marketing’s “Product Launch Essentials” seminar explores how to plan for a product launch and provides his top tips on where to focus to achieve the best result.

BCTIA - Product Management Group – Oct 25, 2011 FacilitatorDerek Pettingale – Regional Product Marketing Manager

Schneider Electric - Renewable Energies

Tonight’s Speakers - Strategy / Protection/ Valuation

Brent York, P.Eng, MBA, MIESCEO of Tangenesys Consulting

Chris MetcalfeLawyer, Gowling Lafleur Henderson LLP

Miles SteiningerIP Advisor, SAP AG

World Intellectual Property Organizationhttp://www.wipo.int

IP.com Products and Services• Free Patent and Non-Patent Literature Database• Defensive Publishing• Prior Art Research and IP Analytics• Intellectual Property Web Log

http://ip.com

United States Patent and Trademark Officehttp://www.uspto.gov

European Patent Officehttp://www.epo.org

• Growth in Intangible Value

Brent York, P.Eng, MBA, MIESCEO of Tangenesys Consulting

Growth in Intangible ValueStudy by Ocean Tomo (Chicago, June 16, 2010)“Our further research shows that a significant portion of this intangible value is represented by patented technology”. J. Malackowski – Chairman – Ocean Tomo.

Study by Ocean Tomo (Chicago, June 16, 2010)“Our further research shows that a significant portion of this intangible value is represented by patented technology”. J. Malackowski – Chairman – Ocean Tomo.

Smart IP Strategy – Where does it fit?

Corporate Vision

Corporate Strategies

IP Strategy

Value Creation

Value Extraction

Where’s the business going?

Who do you want to be?

How are you going to get there?

How is success measured? (mkt.

share, capital value, products)

IP Strategic Framework

Typical Portfolio Roles

Type Role

Core Covers core technology

Guard Covers improvements, enabling technology, features

Applications Covers applications of the basic technology

Numbers-building Increases the patent count

Counterstrike Covers competitor’s products

Typical Start Up Portfolio @2yrs

Applications or Guard(2-5)

Core(1-3)

NumbersCounterstrike

(1-2)

How to Visualize an IP Estate –

Technology “G”

Technology “G”

Technology “A”

Technology “B”

Technology “F”

Technology “E”

Technology “D”

Technology “C”

Core Technologies

P = PatentID = InnovationTS = Trade Secret

Innovation X-Technology Framework

Eg: Solar PV Grid Tie

Solar Optimization

Cell Quantum Efficiency

Collection Technology

Power Management

Energy Storage Grid Tie Optimization

Solar Optimization

Cell Quantum Efficiency

Collection Technology

Power Management

Energy Storage

Grid Tie Optimization

Typical Industry focus – nearest neighbour innovationTypical Industry focus – nearest neighbour innovation

Strategic Framework – (Examples for illustration only). Near Term – Current Market Mid-Term – Market Transition Value Long Term – Visionary ValueMarket Segments

- 100 MW Scale Facilities - MW Commercial Local - Scalable KW Residential

Technology - Adaptive tracking - Passive Collection Systems- Thin film Solar Cells

- Passive flexible solar shingles and siding materials connected to local storage/grid tie

IP Focus - Optimization of $/kw- System optimization

- Efficient integration into local environment and grids

- Local distribution & storage

- Integration into construction standards.

- Energy storage

Collateral OutputProof of Existence

- Collaboration on national scale projects -

- Integration of prototype system in commercial application.

- Neighborhood residential trials

- Zero net energy

Strategic Initiatives

- Federal scale funded projects – Nat’l labs

- Storage vs grid tie modeling. - Combining form & function of materials with energy needs

• Protection

Chris MetcalfeLawyer, Gowling Lafleur Henderson LLP

• What is Intellectual Property?– Assorted rights to exclude others– National in scope– Some harmonization through

international treaties & conventions

• Types of Intellectual Property– Patents – Trademarks – Copyright – Industrial Designs – Trade Secrets / Confidential Information– Other

• Pros of Patenting?– Competitive Advantage– Blocking patents– Royalty Stream– Attract Investment– Negotiation – cross license

• Cons of Patenting– Expense– National protection– Publication required– Definite term (20 years)– Patent not right to practice

• Freedom to operate• Regulatory approval

• Alternatives to Patenting• Trade secrets

– Inexpensive– Immediate protection– Can protect inventions not protected by patents– Potentially indefinite term– No publication required– Secrecy must be maintained– Does not prevent independent creation

• Publication– Prevent others from obtaining patent protection

• Requirements for Patent– Statutory Subject Matter– Novelty– Inventive Step (non-obviousness)– Utility

• Statutory Subject Matter–“any new and useful art, process, machine,

manufacture or composition of matter” or any improvement thereto.

–Certain exclude subject matter• Methods of medical treatment, higher life forms,

abstract theorems, (business methods???)

• Utility–Real world, specific utility

• described in the patent application

–No patents for inventions that defy scientific principles (e.g. perpetual motion)

• Novelty– Invention must be new in view of any public

disclosure before application filed• single disclosure

• Inventive Step– Not obvious in view of any public disclosure

before application filed• multiple disclosures may be considered• from a variety of sources

• Public Disclosure (Prior Art)– Made available to public by:

• Publication • Public use• Sale/offer to sell (US)• Oral disclosure (conference proceeding; thesis defense)• Grant applications• Internet postings

– Disclosure must be:• Non-confidential• Enabling

– Grace period:• available in limited countries

• Maintaining Confidentiality– Avoid publicly disclosing your invention– Consider Non Disclosure Agreements (NDAs)– If prior public disclosure is unavoidable, grace

periods are available in some countries

• You have an invention – now what?– Internal review– Comprehensive invention disclosure– Maintain confidentiality – Conduct a patent search (in-house/externally)– Patentability opinion – may be oral– Determine inventorship – Determine ownership – check employment/contractor

agreements– Obtain executed assignments– Use patent agent to draft and file application

• Valuation

Miles SteiningerIP Advisor, SAP AG

• Valuation, recent sales– 2010 Dec, Novell, sold: 882 “patents” × $510,204 each = $450 Million– 2011 July, Nortel, sold: 6,000 “patents” × $750,000 each = $4.5 Billon– 2011 Aug, Motorola, sold: 24,500 “patents” × ≤ $510,204 each ≤ $12.5 Billon

• Highest damages collected after trial– 1991, Polaroid v. Kodak, 12 patents, $77 million

each, $925 Million (between $1.5 and $2.25 Billion today)

• Valuation, lowest – $0, or less

• Valuation Calculations– What you paid for the patent procurement– The profit potential or cost savings the invention

brings to your business – Reasonable portion of savings over a reasonable set

of licensees less enforcement costs– Comparable patent sales– Time and risk discounting to the above– Option based pricing – e.g., variation of Black-Scholes

• Valuation– The value of the patent is based on the option a

patentee has to go to court to enforce their claims– From the above all other value flow – e.g., licensing

revenue, asset sale, cross-licensing, royalties, and the like

– There is nothing elsewhere of value that is worth paying for – i.e., not a publication nor an award

– The value is not related to the cost of the patent’s procurement but you will want to track this

n

• Valuation– The value increases when the

claims align with strategy, technology, and law

• Getting one aspect wrong is bad• Strategy is not only your own but

reasonable alternatives • Technology is future state of art

not current • Be holistic and prescient

– The value increases when bundled with other assets

BCTIA - Product Management Group – Oct 25, 2011 FacilitatorDerek Pettingale – Regional Product Marketing Manager

Schneider Electric - Renewable Energies

Questions or Comments for Tonight’s Speakers?

Brent York, P.Eng, MBA, MIESCEO of Tangenesys Consulting

Chris MetcalfeLawyer, Gowling Lafleur Henderson LLP

Miles SteiningerIP Advisor, SAP AG