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Delivering innovation thatmatters to you

Brian HinmanCEO, Philips Intellectual Property and StandardsChief Intellectual Property Officer, Royal Philips

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Our vision At Philips we strive to make the world healthier and more sustainable through innovation.

Our goal is to improve the lives of 3 billion people a year by 2025.

We will be the best place to work for people who share our passion.

Together we will deliver superior value for our customers and shareholders.

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Founded in 1891, in Eindhoven, The Netherlands, to manufacture incandescent lamps and other electrical products. For more than 120 years, we have been improving people’s lives with a steady flow of ground-breaking innovations.

A born innovator

Philips’ founding fathers: Frederik, Gerard and Anton Philips

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Royal Philips

42%Healthcare

37%Lighting

21%Consumer Lifestyle

Est. 1891Headquarters inAmsterdam, Netherlands

113,000+Employees worldwide in 100+ countries

€ 23.3 billionSales in 2013Portfolio 70% B2B∽

$9.8 billionBrand value in 2013

* Based on sales last 12 months June 2014 (Excluding Central sector (IG&S)

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Presence in more than +100 countriesPhilips’ revenue across geographies

Growthgeographies

North America

Western Europe

Other mature geographies

36% 30% 26% 8%

1 Based on sales last 12 months June 2014 2 Growth geographies are all geographies excluding USA, Canada, Western Europe, Australia, New Zealand, South Korea, Japan and Israel

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Presence in more than +100 countriesPhilips’ seven largest markets

North America

€6,4billion

1 Seven largest markets by sales in 2013.

China

€2,9billion

Germany

€1,4billion

France

€915million

UK

€692million

Netherlands

€669million

Japan

€1,0billion

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Presence in more than +100 countriesPhilips has R&D sites and manufacturing in all continents

North AmericaEmployees: 29.233

R&D centers: 22Manufacturing sites: 40

EMEAEmployees: 41.829

R&D centers: 21Manufacturing sites: 25Latin America

Employees: 3.189R&D centers: 3

Manufacturing sites: 6

AsiaEmployees: 40.438

R&D centers: 13Manufacturing sites: 25

1 Source: Philips Annual Report 2013.

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We manage a dynamic portfolio and we turn unexpected possibilities into great innovations

+40 64.000 7%of sales

businesses patents in R&D

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We hold unique leadership positions globally

UltrasoundPatient Monitoring

Image-Guided interventions

Sleep Therapy Systems

Cardiovascular X-ray

Healthcare

Kitchen Appliances

Electric Hair Care Rechargeable Toothbrushes

Mother & Child Care

Male Electric Shaving

Consumer Lifestyle

LED Lamps High-performance LED

Automotive Lighting

Professional Luminaires

Lamps

Lighting

1 Global or Regional #1 or #2 position in the market

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Philips Brand: Bringing innovation and you together

With our global presence in over 100 countries - and our trusted brand, we are uniquely placed to understand the local challenges people face.

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Everyone working together to make Philips a stronger brand

One brand promiseConsistent brand experienceDriving brand preferenceGenerating brand value

9.8USD billion

Brand value Growth

Source: Interbrand Best Global Brands 2013 ranking

+8%vs. last year

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Philips IP&S – Corporate video

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Business strategy

Key IP strategy input parameters IP strategyBusiness implications

• Identify risks and opportunity

• Review decision to enter a market / adjacency

• Review plans to continue a business

• Review R&D intensity and programs based on identified IP portfolio generation opportunity

• Identify M&A targets

Value model

• Define models: exclusivity, commercial, mitigation, defensive (incl. market penetration of our technology)

• Evaluate current patent utilization• Define exclusivity enforcement level• Use Sector IP benefits model to assess

IP value

• Define IP needs• Identify portfolio generation

opportunities• Right mix of patents, designs, trade

secrets & trademarks • Defined protection layers• Define country filing scheme• Define IP conditions for 3rd party

cooperations

IP portfolio management

Assess key parameters

Evaluate additional

parameters

• Philips basic IP position• 3rd party IP position• Industry maturity

• Business control points • IP risk• Identified

differentiating capabilities

• Technology characteristics

• Assess competitive technology landscape and trends

• Industry fragmentation and segment market shares

• Other barriers to entry• Role of software /

services / solutions• Importance of

platforms / ecosystems

We define IP strategies based on business strategies and key IP and industry parameters

FIRST VIEW

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• Define innovation needs for short – median – long term

• Create portfolio plan in accordance with IP strategy

Opportunity filtering

Case development

Case realization

IP needs identification

Expire

Maintain as is

Terminate

Capture value (license / enforce / litigation / sell)

Portfolio building On-going optimization / RevaluationNeeds

identification

• Assess inflow and build portfolio from all sources (internal & external)

• Deploy different IP portfolio building options covering relevant IP types in relevant countries

• Use IP acquisition pro actively to enter new domains

• Revaluate the portfolio in cycles with different views such that all IP is assessed at least once every 3 years to identify optimization needs

• Realize value via various ways: maintain or capture value (license-out / enforce / litigation / sell)

Strategy driven & strategy driving; Integrated Intellectual Asset Management

Pro-active IP portfolio management process enables structural capturing of IP value

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Philips has developed the world’s most sophisticated IP Benefits Model

Reliability

Recognition

Accountability

• Shows impact of IP in the period and going forward

• Bottom-up, granular approach by feature/product group

• Using multiple data points as reference

• Adequate level of recognition inside IP&S

• High level calibration done with each BG GM’s

• Alignment within each BG to ensure viability and acceptance of model

• Can be used:– As KPI for IP&S (NPV of

transactions)– For licensing vs exclusivity cases– To track under utilization of IP

potential by business– To flag the impact of expiring IP

protection– For long term target setting

towards businesses

StrengthsThe model enables to measure value enabled through key IP&S activities

• Quantify the IP component of business results (incl. details by feature, types of IP etc.)

• Create awareness on the importance of IP

• Measure the NPV of transactions realized and understand the value of our IP portfolio

• Aid resource allocation decisions (benefits vs. costs)

• Input for business strategy definition

• Reference tool for accounting treatments

• Overall objective is to maximize value out of the Philips IP portfolio

• Rigorous methodology for determining optimal IP value model for Philips

– Understand synergy (e.g. platform, data) effects

– Integrate perspectives from e.g. B/M, research

• Lean governance that ensures decision making at appropriate level

• Mechanism for addressing stalemates

Objectives

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Philips delivers innovation that matters to you

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