What is the current trend of the brokered patent market, and how can you as a buyer or seller exploit the current patent climate? We look into market pricing, litigation risks, NPE activity and more to help you decide your best patent options for 2015.

1. Business Sense • IP MattersBusiness Sense • IP Matters 1
Patent Market 2015 –
Buyers, Sellers & What Are They
Paying?
Kent Richardson & Erik Oliver
November 23, 2015
Contact Information:
+1 (650) 967-6555
info@richardsonoliver.com
Copyright 2015 ROL

2. Business Sense • IP Matters
Agenda
Solving the
Patent
Challenge
Case example of building and buying patents to address the
challenge
Patent
Market
Trends and
Forecast
The brokered patent market
Market prices for patents today and trends
Who is buying and who is selling
What about Alice?
How to Buy
Effectively?
Corporate patent buying overview
Copyright 2015 ROL 2

3. Business Sense • IP Matters
Case Study: Why Trade in Patents?
• OurCo’s revenue grew very quickly (from
$<50M to >> $1B) in the course of a few
years
• Successful IPO
• Revenue continues to grow
• Almost no patents (< 50)
• Patents were not pursued and were not a
strategic focus
• OurCo faced the risk of defending against
significant patent assertions
• NPEs (IV, small NPEs)
• Corporate patent asserters (Microsoft,
IBM…)
The story of OurCo – the challenge
Examples Companies With
Similar Challenges
Copyright 2015 ROL

4. Business Sense • IP Matters
Typical Patent Defense Considerations
4
OurCo’s
Patents
OurCo’s
Revenue
Asserter’s
Patents
Asserter’s
Revenue
Company to Company
Copyright 2015 ROL
• Revenue generation
• Create freedom to operate – remove patent risk
• Strategic/business interference
Patent asserter’s goals
• How do the asserter’s patents apply against OurCo’s revenue
• How many patents can I say OurCo infringes?
• How many patents does OurCo have against me? Revenue impacted?
• Overall portfolio size/quality/growth of both companies
Primary consideration in patent asserter’s decisions

5. Business Sense • IP Matters
OurCo’s Ecosystem of Patent Risk
5
Patent threats come from OurCo’s near ecosystemWhat is OurCo’s business ecosystem?
Comp
etitors
Custo
mers
Suppli
ers
Partne
rs
OurCo
Corporate asserters
OurCo’s potential patent risk
Copyright 2015 ROL

6. Business Sense • IP Matters
OurCo’s Ecosystem of Patent Risk - Filtered
6
OurCo’s potential patent risk
?? ? ?? ? ?
OurCo
Which risks is OurCo going to address?
Copyright 2015 ROL

7. Business Sense • IP Matters
OurCo’s Patent Strategy Planning and Execution
• Ecosystem risk analysis
• Identify target organic patent
development and patent purchase
technology areas
• Develop budgets and authorization
process
Planning
• Substantial increase in organic filings
• Directed patent purchasing program
to fill in gaps in OurCo’s counter-
assertion portfolio
• Ongoing continuation practice of
current portfolio
Execution
7
0
100
200
300
400
500
600
Portfolio
Internal Purchased
T=0 T=4 years
Copyright 2015 ROL
?

8. Business Sense • IP Matters
OurCo’s Patent Strategy Actuals
•Growth of >1000% increase in new filings versus
T=0
•Idea harvesting sessions increased
•Internal evangelizing
•Inventor recognition increase
•Internal capabilities for managing the flow of
new inventions and new filings
Organic patent
•More than 250 patents purchased
•Strategic purchases
•Failed high profile startups
•Brokered patent market
•Private corporate sellers
•Bulk purchases
•Large purchases from select corporate sellers
Patent purchases
8
0
100
200
300
400
500
600
Portfolio
Internal Purchased
T=0 T=4 years
Copyright 2015 ROL

9. Business Sense • IP Matters
Case Study: OurCo Addresses Patent Deficit with
Bought and Organic Growth
OurCo Recognizes Its Strategic Patent
Challenge
Effective Organic and Patent Purchase
Addresses the Challenge
9
0
20
40
60
80
100
120
140
#ofAssets
Priority
Patent Assets at T=0
Internal
0
20
40
60
80
100
120
140
#ofAssets
Priority
Patent Assets T=4
Internal Purchased
Copyright 2015 ROL
~15 year span ~15 year span

10. Business Sense • IP Matters
Agenda
Solving the
Patent
Challenge
Case example of building and buying patents to address the
challenge
Patent
Market
Trends and
Forecast
The brokered patent market
Market prices for patents today and trends
Who is buying and who is selling
What about Alice?
How to Buy
Effectively?
Corporate patent buying overview
Copyright 2015 ROL 10

11. Business Sense • IP Matters
Patent Buying Ecosystem
Patent
Market
Buyers
• Apple, Amazon, Facebook,
Google, Intel, Microsoft,
Qualcomm
• Intellectual Ventures, Acacia
• RPX, OIN, AST, Unified
Patents
Sellers
• SMEs, Cisco, Yahoo!, ATT,
Verizon
• Intellectual Ventures, AST,
RPX
Deal Makers & Brokers
• Richardson Oliver Law Group
• Patent Profit, Epicenter, ICAP
• Bankers, law firms, IAM
managers
11Copyright 2015 ROL

12. Business Sense • IP Matters
How Big Is the Patent Market?
12
•Since 2011, we have tracked $4.5B of brokered patent packages + $2.4B of non-brokered
•Over 2,000 packages with over 63,000 patent assets
•118 technology categories represented from LEDs, Displays, Social Networks, Automotive
Robust market – Nearly $7B of patent deals tracked
•566 brokered packages received containing nearly 9,000 patent assets
2015 market remains robust
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report
Copyright 2015 ROL
$-
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
$7,000.00
$8,000.00
Total Asking Prices ($M) - Brokered and Private Market
Total Asking Price Unsold Total Asking Price Sold

13. Business Sense • IP Matters
Introducing the Brokered Patent Market
• Quasi-public market for patents supplied by patent brokers and regular
sellers
• Patents are business assets and trading in them is a natural extension of
patent strategy complementing business strategy
• If patents can be traded, a value and price can more easily be defined
Why the brokered patent market?
• It’s where patents are assigned a price
• Market dynamics are not well understood – clients want to answer these
questions:
• Am I getting a good price?
• Are these good deal terms?
• Are there better patents available?
• Few companies have substantial information about the market, which gives
them an advantage
• NPEs have more information - Intellectual Ventures, Acacia
Why study the brokered patent market?
13Copyright 2015 ROL

14. Business Sense • IP Matters
What Is in a Brokered Patent Package?
•Contents
•List of patents for sale, applicable market, infringement analysis (claim chart), background on the seller
•Additional information
•Asking price, bid dates, special circumstances (license back, specific encumbrances)
Typical package
•Confluence Patent Portfolio
•Single family (15 US Patents and 7 open applications) relating to social network data aggregation.
•2006 priority date.
•Received July 2013
•Sold October 2014
•Asking prices: “7 figures”
•Multiple claim charts presented for
•Apple
•Google
•Facebook
•Purchased by an operating company
•Fingerprint Cards AB
Example package from Patent Profit (Will Plut)
•Receive about 50 packages per month covering a broad range of technologies
Package flow
14Copyright 2015 ROL

15. Business Sense • IP Matters
2015 Market Pricing
15
Asking Price $K
Top and bottom 5 data points from
each set removed
Per Asset Per US Patent
Average $189.88 $276.68
Min $16.95 $30.00
Max $925.00 $1,000.00
StdDev $183.18 $249.29
NumData 430 423
• Prices are down about ~$50K
• But, sales rate is 23% ahead of comparable period last year
• Prices vary substantially by package size
Market pricing
Copyright 2015 ROL

16. Business Sense • IP Matters
It’s a Great Time to Be a Buyer!
16
• 2015 asking price $190K per asset, down from $269K in 2014
• More lower priced deals in 2015 drops the asking prices
• Market is becoming more efficient at selling low price packages, plus prices
are dropping
Asking prices are down
$190K
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report

17. Business Sense • IP Matters
Pricing Focus
Brokers favor the $250K-to-$2M
price point
57
66
133
79
33
40
13
2
0
20
40
60
80
100
120
140
Distribution of asking prices, top and
bottom 5% removed
Bulk pricing kicks in with > 20 assets
0
50
100
150
200
250
300
350
400
450
500
1 2 to 5 6 to 10 11 to 25 26 to 50 51 to
100
101 to
200
Per Asset Asking Price by
Package Size (# Assets)
17Copyright 2015 ROL

18. Business Sense • IP Matters
2015 Average Asking Price per US Issued Patent
by Tech Category (US$)
Copyright 2015 ROL 18
• Tech pricing is important for making buying decisions
• Business process (Financial Technology) related patents still
demand price premiums
Pricing by tech category
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report

19. Business Sense • IP Matters
Asking Price $K With EOU Top/Bottom 5% Removed
Per Asset Per US Patent
% EOU Packages Asking Price vs General Market 134% 123%
Average $255.00 $340.58
Min $22.73 $41.67
Max $1,000.00 $1,142.86
StdDev $233.12 $270.98
NumData 167 165
Claim Charts (EOUs) Drive Pricing
• Almost no drop in pricing for claim charted packages
• 25% better chance of a sale if there is an claim chart
Claim charted packages maintain their pricing power
Copyright 2015 ROL 19
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report

20. Business Sense • IP Matters
Sales Rate Is Up (a Little)
20
•Represents the percentage of patent packages sold (as recorded in the US Patent & Trademark
Office assignment records)
•Sales rates remain down sharply from 2009, with estimated 2014 packages slightly higher
•Packages sell in the first two years  sales data lags listing data by about 2 years
Sales rates are up slightly, but still below 30%
Copyright 2015 ROL
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report
Copyright 2015 ROL

21. Business Sense • IP Matters
Buying Patents Faster is an Advantage
21
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Cummulative % Sales 2014 by Months from Receipt Date
Advantage to Buy Here
Copyright 2015 ROL

22. Business Sense • IP Matters
Distribution of Seller Type by Sale Year
22
•Operating companies represent over 71% of the patents on
the market
•NPEs have substantially increased their sales up from 11%
to 16% - likely as a result of difficulties enforcing their
patents
•Companies obtaining cross-licenses prior to competitors
selling their portfolios will continue to benefit
Operating companies dominate the market
Top Sellers (All Years by Package Count)
Alcatel Lucent
Allied Security Trust (AST)
ATT
BAE Systems
ETRI
Fujitsu
HP
Italian National Research Council
Korea Institute of Science and Technology
(KIST)
RPX
Siemens
Sony Corporation
Spansion
Verizon
Xerox Corporation
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report
2014 and 2015
Operating Company 71%
NPE 16%
Inventor 8%
University/Research 1%
Defensive Aggregator 1%
Other 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Distribution of Seller Type by Sale
Year
Copyright 2015 ROL

23. Business Sense • IP Matters
Who Sells to IV (Fund I & II)?
OrderedbyNumberofPatentsSold(atleast30sold)
Top 20 Next 20 Next 20 Next 20
Kodak Nortel Recursion Software Mosaid
Digimarc Cubic Wafer Hong Kong Technologies Lapis
NXP Genesis Microchip Nippon Steal Casio
Raytheon Marconi IP Fujitsu Thales
Mangachip Delphi Chunghwa Picture Tubes Alcatel-Lucent
Telcordia Verizon Sonic Dowling Consulting
Transmeta Aplus Flash AT&T Lockheed Martin
Spyder Navigations Autocell Katrein-Werke Pulse-Link
Amex Crosstek Capital California Inst of Tech Lightspeed Logic
Polaroid Tier Logic Be Here PSS Systems
Cypress Semi Mindspeed Technologies Digital Imaging Systems DuPont
Daimler Cirrus Logic Ideaflood Lightsmyth Tech
France Telecom Kimberly-Clark UMC ST Micro
Primax Electronics Airnet Communications Microsoft Rockwell
Conexant Idelix Software Airip Cooler Master
BAE Icefyre Semi Discovision Xerox
Sanyo Mitsubishi Motorola Arraycom
Nokia Neomagic Triquint Believe
Bellsouth Oki Electric Terabeam General Dynamics
Entorian IPWireless Exclara
23
Many “blue-chip”/household names among sellers of patents to IV
Implications? How would something like a cross-license impact a future aggregator?
Kent Richardson and Erik Oliver. "What's inside IV's patent portfolio?" IAM Magazine, Issue 66, July/August 2014
Copyright 2015 ROL

24. Business Sense • IP Matters
Distribution of Buyer Type by Sale Year
24
•NPE buying remains a significant part of the market
with Intellectual Ventures leading the buying
Operating companies remain strong buyers
Top Buyers (All Years by Package Count)
Allied Security Trust (AST)
Apple Computer
Intellectual Ventures
LinkedIn
Google
RPX
Open Invention Network (OIN)
Qualcomm
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report
2014 and 2015
NPE 42%
OpCo 34%
Defensive Aggregator 21%
Other 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Distribution of Buyers Type by Sale
Year
Copyright 2015 ROL

25. Business Sense • IP Matters
Litigation and IPR Rates – 2014 Listed
25
Total Listed 2014 Sold Unsold All
Packages 119 512 631
Litigated 2014 1 2 3
% Litigated 0.84% 0.39% %0.48
• Patent litigation rate is low for purchased patents,
but none public assertions are not shown
• <1% from 2014
• IPRs are on the rise
• 6 in 2014
• 15 in 2015
Public risks are relatively low
Copyright 2015 ROL

26. Business Sense • IP Matters
IV Has Not Stopped Buying
• Launched around 2014
• Purchased technologies
• Media storage
• Computer memory
• Spansion assets
• Rambus assets
• Networking
• Cable TV
III Fund buying
• Buying is less aggressive than Fund I
and II
• Less capital in Fund III
• Concern over inflating the price of
patent
Fewer purchases
26
• Richardson Oliver Q1 2015 Patent Sales Report
Copyright 2015 ROL

27. Business Sense • IP Matters
Some Patent Brokers Consistently Beat the
Market Sales Rate
27
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 10 20 30 40 50 60 70 80 90 100
SalesRate
Number of Packages Listed by a Given Broker
2014 Broker Sales Rate by Number of Listed Packages
2014 Current Sales Rate (18%).
Projected is 29%
Copyright 2015 ROL

28. Business Sense • IP Matters
Surprising Delay in Recording Many Assignments
28
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
All Sales 94 116 70 26 9 14 6 3 3 3 0 4 0 1 0 1 0
0
20
40
60
80
100
120
140
Months
Number of Months Delay in Recording the Assignment After the Executed Date (All Sales)
A long time to register the purchase!
Copyright 2015 ROL

29. Business Sense • IP Matters
Alice and Business Process Sales Rates Are Down
Relative to Overall Market Sales Rate
Alice Impacted Patent Packages Still
Selling Better Than Overall Market
Business Process Sales Rates Are
Down Substantially
29Copyright 2015 ROL
Business process pricing disconnected from sales rate?

30. Business Sense • IP Matters
Agenda
Solving the
Patent
Challenge
Case example of building and buying patents to address the
challenge
Patent
Market
Trends and
Forecast
The brokered patent market
Market prices for patents today and trends
Who is buying and who is selling
What about Alice?
How to Buy
Effectively?
Corporate patent buying overview
Copyright 2015 ROL 30

31. Business Sense • IP Matters
Corporate Buying Program - Overview
•Reduce exposure to corporate patent assertions by building a counterassertion portfolio
•Examples of active corporate asserters include IBM, Qualcomm, Microsoft
•New asserters rise, especially when revenues are down
Primary goal: Defensive counterassertion
•Buy patents to reduce the risk that those patents can be used against your company
•Other techniques work here too, buying consortium (e.g. AST, OIN, RPX, Unified)
Secondary goal
•Agree on qualities for desired patents
•Buying criteria anchored with business rules can help filter packages quickly and efficiently
•Cost of diligence
•Legal patent diligence can cost $5-50K, other diligence is cheaper and can filter out many
packages
•Over 98% of the packages will not meet your business needs
•Eliminate low value packages quickly
•Bidding and pricing
•Management buy-in
Key challenges
31Copyright 2015 ROL

32. Business Sense • IP Matters
Process Overview: Example Filtering and
Relative Diligence Costs
32
ROL
package
database
Search
results
candidate
pool
Preliminary
human
filtering
Detailed
filtering
Test
availability
and EOU
creation
Further
testing
Bidding
and buying
2050 500 100 50 10 5-7 1-3
Packages Remaining
Copyright 2015 ROL
$ $ $$ $$ $$$ $$$$ $$
Relative Diligence Costs

33. Business Sense • IP Matters
Effective Filtering of Patents Reduces Costs
33
> 60% packages eliminated because the specific technology does not match the business need
Claim analysis and prior art searches are more labour-intensive and costly and should be delayed
• Source Richardson Oliver Law Group LLP, 2015 Brokered Market Report

34. Business Sense • IP Matters
Conclusions
•Billions of dollars of patents brought to market every year
•Total brokered patent market sales is $233M
•Private market is much bigger (5-10X
•Diverse technology areas
•Asking prices have dropped to $190K per asset, excellent time to be buying
•Sales rates remain relatively low at 29%
Patent sales market remains robust
•Organic growth addresses long term strategic challenges
•Buy patents allows company could not have invented
•Priority dates can pre-date your company’s founding
•Purchased patents are effective for counterassertion
•Manage key diligence questions early to drop your cost of finding and buying patents
Focused patent development and buying addresses strategy challenges
34Copyright 2015 ROL

35. Business Sense • IP Matters Copyright 2015 ROL 35
BUSINESS SENSE • IP MATTERS
ROL Group has over 60 years of IP strategy and execution
experience. We ask the business questions first. We
blend in-house and large law firm experience to create
clear steps for success.
We guide companies through unique IP challenges—like
buying and selling patents, developing licensing
programs, defending against patent assertions, and
creating a value-driven IP portfolio. We give direction to
businesses that share our passion for new ideas, creative
problem solving and forward motion.
Contact Information:
+1 (650) 967-6555
info@richardsonoliver.com