2014 STEM Educator Academy

Emerging Landscape for Intellectual Property

Dipanjan (DJ) Nag, Ph.D., MBA, CLP, RTTPPresident and CEO, IP Shakti, LLCAdjunct Faculty, Rutgers UniversityVisiting Professor, Shizuoka University

BACKGROUND

BACKGROUND

35 Startups and >300 licenses

ClearView DiagnosticsInnovating For Life

INTELLECTUAL PROPERTY: YOUR PRIME ASSET

Components of S&P 500 Market Value

Data: Ned Davis Research, Inc.http://www.youtube.com/watch?v=3Uzmg2bEgv8&feature=player_embedded

Components of S&P 500 Market Value

Components of S&P 500® Market Capitalization

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

S&

P 5

00 M

arket

Cap

($

'000

s)

Market Premium

Intangible Book Value

Tangible Book Value

Data: Ned Davis Research, Inc.

Greed and fear drives any market

IP MARKETS

Emerging Trends

Ten things that changed the world of IP*• Sale of Nortel’s portfolio for >$4.5 B

a. Sale of Kodak’s portfolio b. Facebook acquisition of AOL patents/ Google buying Motorola

Mobility

*In the last 30 years

Intellectual Ventures created – own >70,000 US patents

Ten things that changed the world of IP*

• IBM makes > $1 Billion from licensing intellectual property

• Technicolor > 650 Million

Ten things that changed the world of IP*

• P&G gets rid of the NIH (not invented here) syndrome a. Rise of Open Innovationb. Pharma has >80% of drugs from Universities

Ten things that changed the world of IP*

• The signing of Bayh-Dole act in 1980a. Success of technology transfer

Ten things that changed the world of IP*

Technology Commercialization in Numbers*

15

Research Funding

(~$693B)

~293,000 Invention

Disclosures

~152,000 Patent

Applications

~61,200 Patents Awarded

67,102 activelicense & options,7,781 start-ups

* Source AUTM Licensing Survey 1991-2011

Outsourcing of legal services – LPO, KPO, BPO

Ten things that changed the world of IP*

Ten things that changed the world of IP*

Rise of the Patent Trolls……

Ten things that changed the world of IP*The rise of global market players BRIC and others…..

• The America Invents Act – IPR, CBM and other changes

Ten things that changed the world of IP*

Ten things that changed the world of IP*• Apple v. Samsung and many other epic battles

INTRODUCTION

• Increased number of players in the IP market place.

• Non-performing entities making news.

• Telecommunications and pharmaceutical patent wars.

• Transactions in patents have increased by many folds and through a varied genre of players.

• Economic significance highlights the mired dynamics.

This is not a Strategy!

Patent-lawsuit firm sues window makers

A New York firm claims that 10 companies are infringing on its patents for window-frame construction.“We are looking for amicable cases, not just lawsuits,” said Robert Berman, president and CEO of CopyTele Inc., the Melville, N.Y., parent company of the firm launching the lawsuits. Berman said in a telephone interview that subsidiary J-Channel Industries Corp. also will pursue royalties from window companies not named in the lawsuits.Ten companies face civil suits in U.S. District Court in Knoxville, Tenn., after J-Channel filed its complaint and suits Aug. 7.J-Channel was created as a subsidiary of CopyTele to pursue alleged window-frame patent infringement, Berman said. Copy¬- Tele’s primary business is “monetization and assertion of patents.”

Patent lawsuit comes home!

LAW OF “UNINTENDED CONSEQUENCES”

THE America Invents Act (AIA) Patent Reform Legislation

Do you know the changes?

New Rules to Invalidate PatentsInter Partes Review

Covered Business Method Patents

Crowd comes to patents

Rise of the “Reverse Trolls”

THE EVER CHANGING IP MARKET

IP development

IP sellers

IP facilitators

IP development & licensing companies

IP Markets Value ChainIP Markets Value Chain

IP aggregators

Defensive IP pools

IP buyers

Patent Licensing & Enforcement Companies

Single asserters Licensing agents Brokers Auctioneers Exchanges M&A advisory firms

CLASSIFICATION OF IP MARKETS VALUE CHAIN

VALUE CHAIN MAPPED TO QUADRANTSVALUE CHAIN MAPPED TO QUADRANTS

IP MANAGEMENT TRENDS

Corporate Strategy

IP Management for Companies

• Reduce competition

• Patent Trolling

• IBM Model• Pure

licensing• NPEs vs.

PAE

• Protect Product

• Protect Margin

• Increased valuation

• Growth• M & A

Strategic Defensive

OffensiveRevenue

IP MANAGEMENT TRENDS

University Technology Transfer Strategy

Know your

BATNA

Best Alternative to Negotiated Agreement

IP negotiation – In a University Setting

Assignment

Exclusive royalty free

Exclusive license

NERF

Non-exclusive license

Exclusive Option

First right of refusal

First right to negotiate

IP Monetization Strategies

Licensing Selling

Litigation Auditing

OTC

Key Take Aways For UniversitiesIP Matters

Not all IP is created equally!

Focus on your claims, that is what makes it valuable

University claw back into IP

If the startup fails who gets the IP?

Improvements and fields of use

IP as a collateral

Can you loan money on the IP?

Revenue strategy for an early stage startup

Can you license the IP as a source of revenue?

BEG, BORROW AND BUILD: THE LEANER STARTUP

Adapting to the new model

It is all about risk mitigation

F&F • $25K-$100K

Angel • $50K-$250K

Series A

• $500K-$2MM

Series B

• $2MM-$25MM

IPO

Ris

k

Time

Key Risks are:- Management risk- Intellectual property risk

- Technology risk

Eval

uatio

nD

ue

Dili

genc e

Term

Sh

eet

Lice

nse

Bus

ines

s Pl

anLa

unch

Fund

Rai

se

Bui

ld

and

deve

lop

Exit

Life Cycle of a Startup

Conclusions

- Intellectual property fuels the knowledge economy

- Startups are the projectiles for “disruptive innovation”

- Intellectual property as an asset class is here to stay