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IP Strategy

Plan Ahead of Time or Pay in Real Time

Igal Rotem – PowerDsine - CEO (ret.) and Co-Founder

May 8th 2012Copyright © 2012 by PowerDsine Ltd. All rights reserved. No part of this presentation may be reproduced or distributed in any form by any means, or stored in a data base or retrieval system, without the prior written permission of PowerDsine.

PowerDsine Snapshot

Established in 1995

New product line every 2-3 years

1999 - Creating “Power over Ethernet”

2003 – Power over Ethernet IEEE 802.3af

standard ratified

Most InnovativeProduct

Outstanding

EmergingCompany

Key Contributor to 802.3 af

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5 private financing rounds raising about $60M

2004 –IPO in NASDAQ raising $80M

2006 - 155 employees

Global presence; R&D in Israel

Sales in the U.S. Taiwan, Korea

Q1 2007 Acquisition by

(MSCC) for $250M PowerDsine Headquarters

VoIP Phone

What Is Power-over-Ethernet ?

Data and Power over a single Ethernet cable

Transmitting safe and uninterrupted power (15W, 48V) over existing LAN infrastructure

IEEE 802.3af standards basedEase End

Device Deployment

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WLAN Access Point

Network Security Device

CostSavings

ImprovedNetwork

Reliability

PoE EnabledLAN Switch

1011011

1011011

1011011

Power

EthernetCable

Power

Power

IP Strategy – Why ??

The purpose – behave as the Market Leader, gain market share, expand gross margins

Activity – Aggressive patent buildup and litigation

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Activity – Aggressive patent buildup and litigation

After 10 years – PowerDsine is THE Power over Ethernet (PoE) Market leader, with over 80% market share, GM > 65%

IP Strategy - How ??

Hire internal US patents register

Building internal IP legal department

Enforcement strategy – Plan and commit the

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Enforcement strategy – Plan and commit the budget

Management commitment

VERY active participation and leadership of standard organizations, IEEE 802.3af standard

Everything is ready for the big IPO …and then..

You get a “friendly” letter…..

The “gift” just before you go public…

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You get a “friendly” letter…..

Now what….. ?

The Prisoner Dilemma

To Pay

Or not to Pay ?

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This is ALSO the question……

We decided to go “crazy”

Actual Litigation - Advantages

(1) Keeping competitors out of the market;

(2) Obtaining monetary compensation;

(3) Deterring potential infringers by sending a message to

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(3) Deterring potential infringers by sending a message to industry that PowerDsine will enforce its patents;

(4) Creating an additional barrier to entry (by way of potential litigation risk)

Actual Litigation - Disadvantages

Substantial actual out-of-pocket expenses

Expenditure of “soft” resources such as the time and energy that engineers and other key company personal

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Will need to devote to the litigation (depositions, discovery, review expert reports, theories etc);

Possible “fight” challenging the validity of company patents; and

Uncertainty in the market over the validity of the patent that is being litigated.

PowerDsine Patent Summary

Date Issued US Patent Number Description

May 2006 #7,046,983 Power Supply for providing Power over Ethernet

May 2006 #7,040,926 Powered Device Interface embedded into an RJ-45 connector

Feb. 2006 #7,006,815 PoE Midspan and/or Integrated either Spare Pairs or Data Pairs

Feb. 2006 #6,996,458 Power over Ethernet Node for use in a DC Power Pool

Jan. 2006 #6,986,071 AC Disconnect for Power over Ethernet

Jan. 2006 #6,985,713 Identifying a Node via a Precision Resistor

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Additionally, PowerDsine has patents issued in 6 foreign countries: China,

Taiwan, Australia, New Zealand, Singapore, South Africa

July 2005 #6,916,206 PoE functionality in a Connector Assembly

June 2005 #6,909,943 Ethernet switch which incorporate PoE technology

Jan. 2005 #6,841,979 Digitally Controlled Power Distribution for PoE

July 2004 #6,764,343 PoE embedded into RJ 45 connector (LAN Connector)

Nov. 2003 #6,643,566 Power over Ethernet End-Span (PoE in a Switch) concept

Nov. 2003 #6,650,554 Power Factor Corrector for Power Supplies

Sept. 2002 #6,473,608 Power over Ethernet Mid-Span (Power Hubs) concept

Apr. 2000 #6,049,471 ASIC Controller (Topology & Concept)

Oct. 1998 #5,828,558 DSP Mathematical algorithm for open loop control

Other Intellectual Property

93 PoE related patent applications pending worldwide

3 patent families in backlighting

2 patent families in telecommunications

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Copyright protection for its software protocol

Trade secrets and know-how developed over many years

PowerDsine name and logo are trademarked, or pending, in major markets around the world

IP Litigation

During the past years PDSN has utilized the court system to enforce its intellectual property rights

Most actions taken by PowerDsine were to enforce PDSN’s Midspan “608” patent

PowerDsine’s patents have been proven through litigation success recently against Phihong and Systems Engineering

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success recently against Phihong and Systems Engineering International

Most of PowerDsine’s IP enforcement litigation cases have settled

Some of the active cases are in settlement negotiations

PowerDsine recently settled litigation with Texas Instruments regarding infringement of PowerDsine’s communications protocol

Discussion….☺☺☺☺

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