MANAGING PATENT PORTFOLIOS
TO MAXIMIZE THEIR VALUE
January 29, 2014
Anaheim, California
Sponsored by McDermott Will & Emery LLP
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2014 ACC-SoCal In-House Counsel Conference
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Panelists
Andrew Mickelsen
– Partner, McDermott Will & Emery LLP
– [email protected]
Chris Bright
– Partner, McDermott Will & Emery LLP
– [email protected]
Melissa Alexander
– Associate General Counsel, Clinipace Worldwide
– [email protected]
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Importance of IP
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Portfolio Acquisitions
580 MIPS patent assets - $350 million
1,100 Kodak patent assets - $527 million
800 AOL patent assets - $1 billion
6,000 Nortel patent assets - $4.5 billion
24,500 Motorola patent assets - $5.5 billion
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Portfolio Value
Barrier to entry
– The right to exclude others from making, using or
selling an invention
Competitive edge
– Marketing patented or patent-pending products and
services
Offensive tool
– Licensing and litigation
Defensive tool
– Freedom to operate and litigation counterclaims
Cross licensing
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Proactive Management
Take stock of portfolio
– Inventory
– Categorization
Define objectives
– Multiple perspectives
Align portfolio activity with objectives
– Development
– Maintenance
– Divestiture
– Enforcement
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Inventory Portfolio
Status
– Pending
– Issued
– Maintenance fees
Ownership
– Assignment of rights
Content
– Claimed
– Described
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Categorize Portfolio
Technology
– Mature
– Active
– Strategic
– Key words
Competitors
– Competing products
– Competing solutions
Other industries
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Define Objectives
Strategic objectives
– Support product development
– Enhance marketing of company and products
– Monetization is not the only source of value
Financial objectives
– Reduce/reallocate costs
– Generate revenue
Management education and buy-in
– Company, marketing, R&D, etc.
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Portfolio Development
New applications
– Aligned with key product areas
– Invention harvesting
– Quantity vs. quality
Continuation application strategy
Balance between validity and infringement during
prosecution
Foreign filing
– Reevaluate jurisdictions
– Reevaluate filing criteria
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Portfolio Maintenance
Milestone decision points
– Office actions
– Allowance
– Maintenance fees
Keep objectives in mind
– Use business, technical and legal input
Update objectives and categorization as company
evolves
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Portfolio Divestiture
New and growing markets
Spectrum of divestiture options
Market value factors
Risks and risk mitigation
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Patent Markets
Competitors
Other industries
Defensive patent aggregators
Patent assertion entities
Patent exchanges
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Divestiture Options
Sales/assignments
Licenses
– Exclusive
– Non-exclusive
Limitations
– Geographic
– Duration
– Field of use
Align with objectives and markets
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Market Value Factors
Applicability
Blocking patents
The life of the patent and license
Established licensing royalties
Comparable licensing rates
Derivative or convoyed sales
Profitability
Others
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Divestiture Issues
Markets tend to be inefficient and lack
transparency
– Difficult to define market for inherently unique assets
– Transaction costs may exceed fair market value for any
particular asset
Unintended consequences
– Impact on overall business
– Public perception of divestiture activity
Increased likelihood of litigation
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Risk Mitigation
Prioritize objectives and allocate due diligence
resources accordingly
– Validity, infringement, freedom to operate
Strategically group assets
– Focus on target, technology, industry, etc.
– Consider including trade secrets / technical know-how
Utilize Patent Office procedures
– Re-exam, post grant review, supplemental examination
Nurture successful assets
– Successful track records tend to increase valuation
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Manage Expectations
Valuation
Timeframe
Internal resource requirements
Public perception
Post-license activity
Litigation risk
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Enforcement Goals
Defensive or offensive
If defensive: cross-licensing or other business
deal
If offensive: injunction or money
If injunction
If money
– Patent markets
– Market value factors
– Licensing and litigation program
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Licensing Meeting
Infringement claim charts
Claim construction
Validity
Damages (financial) model
– Lost profits
– Reasonable royalty
Injunction
Declaratory judgment risk
Fed. R. Evid. 408
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Litigation Resources
Attorney Fee Arrangements
–
–
–
–
–
Contingency
Hourly
Fixed fee
Success fee
Litigation financing
Costs
Other considerations
– Inter Parties Review and other Patent Office
procedures
– Counterclaims and countersuits
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Litigation Preparation
Ready to try the case
Theme(s) from the outset
Company and invention story
Key company witnesses
Key company documents
Preserve documents
Protect the attorney-client privilege
Litigation counsel support
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Take-Away Points
Identify and obtain buy-in of business objectives
Proactively align portfolio with business objectives
Realistically assess the financial potential
Prepare for the possibility of litigation
Manage expectations
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11th Annual In-House Counsel Conference
January 29, 2014 (Anaheim, CA)
www.acc.com/chapters/socal/
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