Comprehensive Portfolio Management

TM
Comprehensive Portfolio Management

Intellectual Property as a Business Tool

Frisina, LLC
Creating Wealth Through Intellectual Property TM

www.frisinaIP.com
Copyright © 2007-2011 Frisina, LLC

Introduction
Representative Sectors Our mission is to create wealth for our clients through the
• Chemicals strategic use of intellectual property.
• Polymers
• Pharmaceuticals We understand the challenges facing businesses, and strive to
• Biotechnology secure and monetize our clients’ intellectual assets by couching
• Biomedical sound legal strategy in innovative IP and business intelligence.
• Medical Imaging With our combination of technical and legal expertise we are
• Advanced Materials uniquely positioned to guide clients through the legal maze of
• Nanotechnology intellectual property strategy facing both start-ups and more
453 South High Street
Suite 302 • Semiconductors established ventures.
Akron, OH 44311 • Medical Instruments
(330)777-0063 ext. 100
• Medical Tests
(330)338-0589 direct • Liquid Crystals
dominic@frisinaIP.com • Power Generation
www.frisinaIP.com
• Fuel Cells
• Software
• Internet Law
• Business Methods


Introduction
• What, Where and Whether to Patent
TM
– Intelligently Planned Innovation iPi
– Patentability

• Risk Management
– Offensive Strategy
– Defensive Strategy

• IP Asset Monetization


What, Where and Whether to Patent

Intelligently Planned Innovation
TM

iPi


TM
• iPi is the first step in comprehensive portfolio
management

TM
• iPi combines market, litigation and IP data to
methodically guide innovation

TM
• iPi is the next generation of classic “patent landscaping”


• The questions that iPi answers:
– Where is IP activity occurring in our patent space?
– What is the pace of innovation in this space?
– Who are the players?
– How well developed are my competitor’s patent portfolios?
– How well resourced are my competitors?
– How much litigation does this space generate, and by whom?
– How is the IP landscape likely to change in the near term?


• State-of-the-art search (a/k/a “collection search”)
– Industry Standard
• All patents in a given technology space
• Typically listed in table form with a summary of each document
– We also include
• Geographic statistics and visualizations
• International Class statistics and visualizations
• Competitor mapping
• Pace of innovation statistics and visualizations
• Custom data according to client needs


• International Classes


Assessing the Patent Landscape


5 Year Projection


Samsung Litigation Stats

Total: 238

Plaintiff: 46
Win: 1, Loss: 45

Defendant: 192
Win: 188, Loss: 4


Offensive Strategy


Offensive Strategy

Patent Space
• Excluding others
– Beyond reserving your niche

• Components
1. Populating a patent space
2. Patent enforcement


Offensive Strategy
• Populating a patent space
– The shotgun approach
• Tends to commoditize IP: volume over substance
• Lacks safeguards against wasting resources
• Divorces IP generation from business strategy and goals
– Intelligently planned innovation
• Fewer patents with higher quality and greater value
• Prevents waste
• IP generation and business strategy are integrally combined


Offensive Strategy
• Enforcement
– Option #1: pay for it yourself
• Cash on-hand
• Loans secured with company assets (possibly intangibles)
• Asset sell-off
– Enforcement begins with a C&D letter and often a concurrent
complaint
• Litigation may be necessary
– Costs skyrocket soon after filing the complaint


Offensive Strategy
• Using NPE’s to your advantage
– Non-Practicing Entities (aka “Patent Trolls”)
– Examples: Juridica, IPVenture, and Intellectual Ventures
– NPE may assume the cost of litigation
• Expect thorough due diligence


Offensive Strategy
• IP “abatement” insurance policy
– Pays for the cost of enforcement
– Priced case-by-case
– Consider high deductible to bring down cost
– Very few underwriters
– Most CGL providers can also provide IP insurance


Defensive Strategy


Defensive Strategy
• “The best defense is
Patent Space
a good offense”
– Yogi Berra

• Defensive strategy is also
risk management
– Litigation risk
– Market-based risk


Defensive Strategy

• Intelligently Planned Innovation
– Combining market, litigation and IP intelligence

• Patent Availability Searching
– Assessing the novelty of a particular innovation
– Identifying potentially problematic art
• Draft around,
• Flag for design around, or
• Abandon early


Defensive Strategy
• Freedom to Operate (FTO)
– AKA product clearance
– Assessing risk of infringing others
– Conduct FTO:
• As early in product development as practicable
• Be mindful of FTO throughout R&D


Defensive Strategy
• Licensing-in or purchasing IP
– Making the decision to license-in
– Risks of licensing
– Typical negotiable terms
• Commercialization requirements • Royalty payments
• Term/duration • Geographic scope
• Degree of exclusivity
• Renewal option
(nonexclusive/exclusive/sole)
• Upfront payments • Field of use restrictions


Defensive Strategy
• Defensive Publication
– When: cost of patenting exceeds the benefit conferred
– Cost: foregoing an exclusive right
– Benefit: preserving your power to practice
– Risk: inadvertent or ill-conceived disclosures


Defensive Strategy
•Patent or publish?
• Is it a core technology or incremental advance?
• Do you actually intend to practice?
• Would a patent block competitive activities?
• Would your competitor benefit from it substantially?


Defensive Strategy
• Defensive Publication
– Typical Modes
• Trade or technical journals
• Private companies: Research Disclosure, IP.com
• USPTO’s Statutory Invention Registration (SIR)
– Beware of publishing on your website


Defensive Strategy
• Contract
– Nondisclosure agreements (NDA)
• Every employee at that time of hire
• Every other person that “needs to know”
– Non-Compete agreements
• Every employee at the time of hire
• Outsourced prototyping, manufacturing, or anyone else who “needs to
know”
– Joint Development agreements
• Rights/responsibilities/ownership of IP


Defensive Strategy
• Defending against patent infringement
– Comply/Settle
– Self-financed defense
– IP Insurance
• defense policy
• defense and indemnity policy


Defensive Strategy
– Defensive patent aggregation services
• Primarily for larger entities
• RPX Corporation www.rpxcorp.com


Monetizing IP


Monetizing IP
• Sale or Licensing-out
– Non-core technology
– Non-productive technology
– Non-threatening technology
• IP auction houses
– www.redchalkgroup.com
– www.adaptipventures.com
– www.patenttransferltd.com


Monetizing IP
• Securitization of IP
– Bond issue
– Backed by licensing or royalty revenues
– Existing income stream required
– ipCapital Group (www.ipcg.com)


Monetizing IP
• Commercial lending
– IP as collateral; must have “explicit” value
– 10-40% LTV
– Many banks do not make pure IP loans
• Angel investors or venture capital
– Usually based on the IP’s speculative or “implicit” value
– Warning: VCs want to be in the driver’s seat


Ohio Economy;
Innovation’s Launch Pad

• Venture Capital investments up 20% since 2003, compared to
8% nationwide
• Cleveland Metro (including Akron) has received over 40% of
all DOD, Third Frontier, etc. funding statewide – over $1
billion since 2002.
• This $1 billion of state incentive has leveraged some $10
billion in additional investment (private equity, bank financing,
etc.)


IP’s Role in Funding Commercialization
• Debt
– Commercial lending: very few banks can use IP as collateral
• Private Equity: Angels and Venture Capital
– Driving IP valuation for trade or strategic exit:
• Likelihood that the technology will actually work
• Likelihood that the technology will be approved for market use
• Size of the market opportunity; who and how many will eventually purchase the
technology
• Potential sales and royalties
• Cost of developing and marketing the technology
• Non-Dilutive Sources
– Federal, State, Local funding


Federal SBIR/ STTR Programs
Federal funding mechanism to support small businesses in:

•Stimulating technological innovation
•Developing products with commercial merit

National Institute of Health http://grants.nih.gov/grants/guide/index.html
Department of Energy/ Office of
Science http://www.science.doe.gov/sbir/Funding.html
Department of Defense/
Congressionally Directed Medical
Research http://cdmrp.army.mil/about/fundinghistory.shtml

National Science Foundation http://www.nsf.gov/funding/pgm_list.jsp?org=NSF&ord=rcnt


Ohio Third Frontier
Cluster Development Programs
to support R&D that addresses the technical and cost barriers to commercialization in Ohio of
advanced energy components and systems, with preference to wind, biomass, and energy
Advanced Energy Program storage. Jan-11
advanced materials products with preference to polymer and carbon nano-materials, liquid
Advanced Materials Program crystals, and bio-based materials. Jul-11
biomedical products, with preference to cardiovascular, regenerative medicine, and
Biomedical Program orthopedics. Jul-11

to support R&D that addresses the technical and cost barriers to commercialization in Ohio of fuel
Fuel Cell Program cell and other advanced energy components and systems Jan-11
to assist Ohio companies in developing next generation products and services in targeted industry
sectors by financing the acquisition, construction, and related costs of technology, facilities,
Innovation Ohio Loan Fund and equipment. Rolling basis

to support research and development that addresses the technical and cost barriers to
Medical Imaging Program commercialization in Ohio of medical imaging components and systems Jul-11
Ohio Research Commercialization Grant support accelerated Ohio commercialization by small companies awarded selected federal R&D
Program funding Not accepting applications in 2010
Photovoltaic Program photovoltaics components and systems. Jan-11

to support research and development that addresses the technical and cost barriers to
Sensors Program commercialization in Ohio of sensors components and systems supporting key Ohio industries Jul-11
to focus resources and incentives on the attraction of companies that can help build critical mass in
Targeted Industry Attraction Grants selected growth industries in Ohio. Not an open solicitation


Thank You
For Further Information
www.frisinaIP.com
Newsletters
IP Owl Blog
Slide Shows

Contact Me
(330)338-0589 Direct
dominic@frisinaIP.com


Comprehensive Portfolio Management

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