1. 1 ABA 25 th Annual IPL Conference Patents, Standards, and Licensing Working (Well) Together At Texas Instruments Lawrence J. Bassuk Deputy General Patent Counsel Texas Instrument Incorporated Dallas, Texas L-bassuk@ti.com

2. 2 Outline Introduction Guiding Principles of TI Patents and Patent Licensing Getting TI Patents Standards and Patent Licensing Commitments Patent Cross-Licenses With Competitors

3. 3 Introduction 1951 license from Western Electric to make transistors under the Bardeen patent to start our semiconductor manufacturing business 1958 TI engineer Jack Kilby invents the integrated circuit, US 3,138,743 1971 TI engineers Gary Boone and Mike Cochran invent a variable function programmed calculator using a single chip microcomputer US 4,074,351

4. 4 Three Guiding Principles Maintaining business freedom, our right to do business Gaining access to other technologies not invented by us Earning a return on our investment in research and development

5. 5 - maintaining business freedom Getting patents prevents others from getting patents on inventions made by TI employees Cross licensing gains worldwide freedom from charges of infringement of extant and future issuing patents

6. 6 - accessing other technologies Patent cross license gives TI the right to use the technology developed by another company

7. 7 - earning a return on our R & D Licensing revenues help earn a return on our research and development expenses Net of negotiated value of patent portfolios

8. 8 Getting TI Patents Filing and Prosecuting TI Patent Applications Patent Review Process Multiple Patentable Inventions In One Patent Application

9. 9 - filing applications and reviewing patents Patent committees review and rate new disclosures File new patent applications for highest rated cases Review patents regularly after issue for TI use and possible infringement

10. 10 - multiple patentable aspects in one patent application Random access memory or digital signal processor complex products with multiple parts and patentable aspects Competitors –rarely copy entire TI product –may use parts of TI inventions Value in getting a patent on each, individual part

11. 11 Standards and Patent Licensing Commitments Scope of Technology Necessary or Essential Patent Claims RAND Licensing Commitment Disclosure of Necessary Patent Claims Voluntary disclosure of licensing terms

12. 12 - scope of technology Describes the technology for which we agree to grant licenses, if we have any necessary claims within that scope Prefer to exclude patents in TI core technology of semiconductor manufacturing technology Outside the scope, no assurance of a license

13. 13 - necessary or essential claims Defines the patent claims that TI agrees to license, if any Within scope of technology Claims necessary to create a product that complies with normative parts of a standard when there is no non- infringing alternative

14. 14 - RAND licensing commitment TI agrees to license necessary patent claims to all who ask for license RAND is acronym for Reasonable And Non-Discriminatory RAND intentionally undefined to work in varying business circumstances over time Non-discriminatory does not necessarily mean same license to all

15. 15 - disclosure of necessary claims Limited to personal knowledge of technical committee participant Not include corporate knowledge No requirement for searching for necessary patent claims Timing of disclosure

16. 16 - disclosure of licensing terms Voluntary only, not required Generally at time of disclosure of necessary patent claims May state only percentage royalty or all terms

17. 17 Patent Cross-Licenses With Competitors Generally, cross license competitors Negotiation process Long-term view of cross licensing

18. 18 - negotiation process Prepare by studying competitor’s products and TI patents Exchange “proud lists” of patents Technical meetings Rate patents Business meetings Cross license agreement

19. 19 - - study competitor’s products Reverse engineer products Study news clippings and competitor’s press releases, technical papers, and patents for description of products Prepare claim charts of infringement Ready to file suit at start of negotiations

20. 20 - - proud lists of patents Short list of patents to be used in negotiations Selected from entire patent portfolio May have as few as 0.1% of extant patents Present best infringement cases of competitor’s products with largest revenues

21. 21 - - technical meetings, TI TI presents arguments of infringement of its patents to competitor TI receives invalidity and non- infringement arguments of their patents from competitor TI rebuts invalidity/non-infringement arguments to competitor

22. 22 - - technical meetings, competitor Competitor presents arguments of infringement of its patents to TI Competitor receives invalidity and non- infringement arguments of their patents from TI Competitor rebuts invalidity/non- infringement arguments to TI

23. 23 - - rate patents Infringement Validity Importance to infringed product

24. 24 - - business meetings Negotiate rating of patents Discuss business interests of parties including interests beyond patents

25. 25 - - patent cross license Portfolio cross license to all patents of each competitor Worldwide May exclude proprietary technologies Royalties are net of value of patents and product revenues of both parties Long term agreement, usually 10 years

26. 26 - long-term view of cross licensing TI has been cross licensing competitors with its patents since ~1985 Expect to negotiate new licenses every 10 years Net of patent values may change next time, negotiate license accordingly

27. 27 Conclusion TI successfully uses patents, standards activities, and patent licensing to advance its business interests, worldwide