privileged and confidential invitation to join lot network ken seddon ceo, lot network sept 30, 2015...
TRANSCRIPT
PRIVILEGED AND CONFIDENTIAL
Invitation to join LOT Network
Ken SeddonCEO, LOT Network
Sept 30, 2015
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PRIVILEGED AND CONFIDENTIAL
Ken Seddon - CEO, LOT Network
Ken Seddon comes to LOT with over 20 years experience managing all areas of intellectual property. Ken has worked at some of the largest patent holders the world including Apple, Micron, Motorola, Intel and most recently as the Vice President of IP at ARM.
A resident of Phoenix, Arizona, Ken graduated from the Georgia Institute of Technology, with a bachelor's degree in Computer Engineering. He also earned a master’s degree in Solid State Device Physics and a Juris Doctorate from Arizona State University.
PRIVILEGED AND CONFIDENTIAL
The Patent Assertion Entity (PAE) problem
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PRIVILEGED AND CONFIDENTIAL
PAE problem getting worse
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Patent Suit Filings Continue On Record Pace, Report SaysBy Matthew BultmanLaw360, New York (July 14, 2015, 6:30 PM ET) -- More than 3,100 new patent cases have been filed in federal court so far this year, a record-breaking number that could put patent filings in 2015 at an all-time high, according to a report released Tuesday.
PAE litigation is on the rise!
2015 likely to be a record based on 1st half actuals
PAEs are responsible for 84% of high-tech patent litigation in the US!
PRIVILEGED AND CONFIDENTIAL
PAEs - hurting innovation
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PAE litigation is on the rise!
2015 likely to be a record based on 1st half actuals
PAEs are responsible for 84% of high-tech patent litigation in the US!
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
1000
2000
3000
4000
Number of PAE initiated lawsuits per year1
PAEs84.1%
15.9%
PAEsOperating Companies
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The PAE problem is getting worse
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US Patent Office: number of patents and new applications by year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
175
350
525
700
Issued PatentsNew applications
The number of patents issued by the US Patent
Office is growing!
(Over 300,000 new patents in 2014 alone)
(thousands)4
PRIVILEGED AND CONFIDENTIAL
The PAE problem is getting worse
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Over 50% of patents sold last year relate to
software
PAEs acquired over 15,000 patent assets in
2014 alone
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PRIVILEGED AND CONFIDENTIAL
Where are the PAEs getting their patents?
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Companies provide PAEs with most of the patents
Operating Company
81%
19%
Operating CompanyInventor/University
81% of patents acquired from PAEs come from
companies 7
Source of Patents
PRIVILEGED AND CONFIDENTIAL
PAEs target small/medium sized software companies
9You are not too small to get sued.
62% of target companies have < $100m in revenue
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Revenue <$100 m
62%
3%7%
16%
12%
Revenue <$100 m> $50b$10b-$50b$1b- $10b$100m - $1b
Defendant Revenue Profile
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PRIVILEGED AND CONFIDENTIAL
PAEs target small/medium sized companies
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62% of the patents used by PAEs in litigation are software patents
The average annual revenue of an PAE target company is $10.8 million/year
On average a software company pays $3.32 million for each lawsuit from an PAE
PAEs cost companies over $29 billion/year in direct accrued costs
Small or medium sized companies pay 37% ($10.73 billion) of those costs
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Overview of LOT
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PRIVILEGED AND CONFIDENTIAL
A network of companies that are working to address the problems of PAEs.
Members give each other a license to patents so ALL LOT members are “immunized” from patents that leave the network and fall into the hands of PAEs.
LOT Summary
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PRIVILEGED AND CONFIDENTIAL
LOT Members are still allowed to:Assert their patents directly against other LOT membersAssert their patents directly against non-LOT membersSell their patents to operating companies (LOT agreement does not apply)Sell their patents under spin-out/M+A activity
There is no burden to membership:LOT members are not required to report if they sold a patentLOT members do not have to give notice before they sell a patent
You may withdraw anytime. Future patents not impaired
LOT believes in traditional uses of Patents
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PRIVILEGED AND CONFIDENTIAL
How does LOT work?
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PRIVILEGED AND CONFIDENTIAL
Illustration of the LOT Agreement's Operation
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21Today: Companies 1 and 2 join the LOT Agreement.
21LOT
Future: LOT membership immune from sold patent, regardless of the owner. 21
LOT
3
X
4
X
Over 325,000 WW assets
Over 99,000 US assets
Tomorrow: Company 2 sells a patent to Company 3. Company 3 is not in LOT. 21
LOT
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$License to LOT
membership automatically
becomes effective.
Legend
- Transferred patent(s)
PRIVILEGED AND CONFIDENTIAL
LOT supports traditional uses of IP
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LOT Network members are free to assert their patents offensively or defensively against non-LOT members.
No restrictions on how IP is licensed to operating companies in a cross-license or commercial agreement.
(note, exclusive license to an PAE invokes the license)
21LOT
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PRIVILEGED AND CONFIDENTIAL
LOT supports traditional uses of IP
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LOT Network members are free to assert their patents offensively or defensively against other members.
No restrictions on how IP is licensed to operating companies in a cross-license or commercial agreement.
21LOT
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PRIVILEGED AND CONFIDENTIAL
LOT Network is non-profit: Costs
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PRIVILEGED AND CONFIDENTIAL
Current LOT members have divested over 1,200 US assets in last two years. (3,300 ww assets)
H04N - Transmitting imagesH04L - Transmitting Digital InformationG06F - Digital Data Processing H04B - Transmitting signalsH04W - Wireless communications
LOT Members have divested patents
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H04N
B21F
H04L
G06F
H04B
H04W
G08B
H04M
H01QH03M
H03FH04JG02BH05K
H04N B21F H04L G06FH04B H04W G08B H04MH01Q H03M H03F H04JG02B H05K H04N B21FH04L G06F H04B H04WG08B H04M H01Q H03M
Top divested categories
211 patents
PRIVILEGED AND CONFIDENTIAL
Over 99,000 US assets Over 325,000 ww assets
H04N - Transmitting images H04L - Transmitting Digital Information G06F - Digital Data Processing G03G - Storing images G06Q - Data processing system
14 Largest patent categories currently in LOT membership
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H04NA61B
H04L
G06F
H04BH04W
G06TH01L
G03G
G06Q
B41J
G06K
G02B
G03F
H04N A61B H04LG06F H04B H04WG06T H01L G03GG06Q B41J G06KG02B G03F H04NA61B H04L G06FH04B H04W G06T
Top current categories
17,339 assets
PRIVILEGED AND CONFIDENTIAL 21
Overlap of patents by top CPC codes
A61B - Medical Diagnosis B41J - Printing G02B - Optical G03F - Semiconductor G03G - Electrography
G06F - Digital Data Processing G06K - Presentation of Data G06Q - Data Processing Systems G06T - Image Data Processing H01L - Semiconductor
H04B - Transmitting signals H04L - Transmitting Digital Information H04N - Transmitting images H04W - Wireless communications
LOT Network(99,000 US assets)
Social Media Co(3459 US assets)
Over 90% of Facebook’s
portfoliooverlaps with LOT’s Top 14
G01R
H04M
H04B
G06QH04L
H04W
A61B
G02BG03G
G06K
H04NH01L
G06T
G03F
B41J
G06F
PRIVILEGED AND CONFIDENTIAL 22
Overlap of patents by top CPC codes
A61B - Medical Diagnosis B41J - Printing G02B - Optical G03F - Semiconductor G03G - Electrography
G06F - Digital Data Processing G06K - Presentation of Data G06Q - Data Processing Systems G06T - Image Data Processing H01L - Semiconductor
H04B - Transmitting signals H04L - Transmitting Digital Information H04N - Transmitting images H04W - Wireless communications
LOT Network(99,000 US assets)
Top 5 Bank(2154 US assets)
Over 82% of Bank of America’s
portfoliooverlaps with LOT’s Top 14
G07D
G07F
H04BG06Q
H04L
H04W
A61B
G02B
G03G
G06K
H04N
H01L
G06T
G03F
B41J
G06F
PRIVILEGED AND CONFIDENTIAL
Recommendation: LOT for Suppliers
Provided by:
Jeffrey BlumenfeldChair, Antitrust & Trade Regulation
Partner, Tech GroupLowenstein Sandler LLP
2200 Pennsylvania Avenue, NWWashington, DC 20037
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PRIVILEGED AND CONFIDENTIAL
Significant value in adding some SuppliersBoth Suppliers and Customers get protection
from patents outside their bilateral ecosystems
Significant Value in adding suppliers to Membership
LOT NETWORK
Company A Company B Company C
Supplier
Supplier
Supplier
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Supplier
Supplier
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Supplier
Supplier
Supplier
Value
PRIVILEGED AND CONFIDENTIAL
LOT does not require members to cross-license each other
LOT does not buy, sell, own, or invalidate patents
LOT does not prohibit members from selling their patents
LOT does not prohibit members from asserting their patents
LOT does not prohibit members from monetizing their patents
LOT does not criticize the PTO or patent quality
What LOT Network IS NOT
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PRIVILEGED AND CONFIDENTIAL
Anyone can join. Any industry, any country, regardless of portfolio size
Agreement drafted to obviate the need of members to give notice, prepare covenants, or track patents that are transferred
No need to report patent transfers or transactions
Increases freedom to operate
As membership grows, so too grows the benefit to each member
No burden to being in the LOT Network
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PRIVILEGED AND CONFIDENTIAL
Questions
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PRIVILEGED AND CONFIDENTIAL
THANK YOU
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PRIVILEGED AND CONFIDENTIAL
1. Patent Freedomhttps://www.patentfreedom.com/about-npes/litigations/
2. James Bessen & Michael Meurer, The Direct Costs from NPE Disputes, 99 Cornell L. Rev. 387 (2014).
3. RPX 2014 Litigation Report.http://www.rpxcorp.com/wp-content/uploads/sites/2/2015/03/RPX_Litigation-Report-2014_FNL_040615.pdf
4. US Patent and Trademark Officehttp://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm
5. ROL Grouphttp://www.richardsonoliver.com/news/2014/12/1/buyers-and-sellers-in-the-2014-brokered-patent-market
6. Linda Biel, AST 7. Dan McCurdy, RPX presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA. 8. Kevin Jakel, Unified Patents presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA.9. Mark Lemely & Douglas Melamed, Missing the forest for the Trolls, Cornell Law Rev. 2013.
References
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