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Fairfield Resources International Inc. 2000 LICENSING AS A BUSINESS Emmett J. Murtha President & CEO Fairfield Resources International FR I Venture Association.

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Presentation on theme: "Fairfield Resources International Inc. 2000 LICENSING AS A BUSINESS Emmett J. Murtha President & CEO Fairfield Resources International FR I Venture Association."— Presentation transcript:

1 Fairfield Resources International Inc LICENSING AS A BUSINESS Emmett J. Murtha President & CEO Fairfield Resources International FR I Venture Association of New Jersey March 21, 2000

2 Fairfield Resources International Inc LICENSING AS A BUSINESS LICENSE THE CROWN JEWELS? ARE YOU CRAZY? FR I Emmett J. Murtha President & CEO

3 Fairfield Resources International Inc AGENDA u THE VALUE OF INTELLECTUAL PROPERTY u WHAT ARE THE ALTERNATIVES TO LICENSING? u CASE STUDY: LONGHORN TECHNOLOGY u CASE STUDY: IBM CORPORATION –Assets –Objectives –Results –Key Factors u LESSONS LEARNED LICENSE THE CROWN JEWELS?

4 Fairfield Resources International Inc Is Intellectual Property Always Valuable? ( Or Just Expensive?) u A PATENT IS A RIGHT –Granted By A National Government –To Stop Someone From Doing Something u A PATENT IS VALUABLE ONLY –If Someone Wants To Use The Patented Invention

5 Fairfield Resources International Inc u YOU MUST MAKE CHOICES –Protect Your IP - Or Lose It –Enforce Your IP Rights - Or Lose Them –License Your IP Rights - And Prosper INTELLECTUAL PROPERTY

6 Fairfield Resources International Inc LICENSING THE CROWN JEWELS ENFORCEMENT OR LICENSING? THESE ARE THE ONLY CHOICES

7 Fairfield Resources International Inc u PRACTICE THE MONOPOLY –3M, Pfizer, Biotechs, Startups, Niche Players u SELECTIVE LICENSING –Intel, Motorola, Kodak, Texaco u LICENSING AS A BUSINESS –Lucent, General Electric, Texas Instruments & IBM WHAT ARE THE ALTERNATIVES TO LICENSING YOUR PATENTS?

8 Fairfield Resources International Inc LONGHORN TECHOLOGY LICENSING THE CROWN JEWELS

9 Fairfield Resources International Inc u Longhorn Technology Has Thousands of Patents u They Get Over 500 New U.S. Patents A Year u Some Longhorn Patents Are Not Available For License –Particularly New Ones, Which Protect Future Technologies Or Products u However, Longhorn Has Made Licensing A Profitable Business –Licensing An Outstanding Collection of Patents Covering Its Main Business To Its Competitors »For Hundreds Of Millions Of Dollars Annually LONGHORN TECHNOLOGY (A HYPOTHETICAL LICENSOR)

10 Fairfield Resources International Inc u COULD THEY NOT DO BETTER BY REFUSING TO LICENSE THEIR COMPETITORS? u PROBABLY NOT, FOR THE FOLLOWING REASONS: –ITS IMPORTANT THAT CERTAIN TECHNOLOGIES BE PROVEN BY WIDESPEAD USE –CUSTOMERS LIKE TO HAVE MORE THAN A SINGLE SOURCE »PARTICULARLY FOR COMMODITY PRODUCTS LIKE COMPUTER MEMORY CHIPS, MOTOR OIL, EVEN PERSONAL COMPUTERS! –LITIGATING TO ENFORCE A PATENT MONOPOLY IS VERY EXPENSIVE »IT IS OFTEN REFERRED TO AS THE SPORT OF KINGS LONGHORN TECHNOLOGY

11 Fairfield Resources International Inc IBM CORPORATION LICENSING THE CROWN JEWELS

12 Fairfield Resources International Inc u APPROXIMATELY 33,000 PATENTS WORLDWIDE –Leader in US Patents Issued Since 1994 u VAST PORTFOLIO OF TECHNOLOGY AND SOFTWARE u ALL INTELLECTUAL PROPERTY CONTROLLED BY HQ u CENTRALIZED LICENSING MANAGEMENT –Licensing Activity Run As A Business –Multinational Staff u OVER 1300 ACTIVE PATENT LICENSE AGREEMENTS –Half Non-US IBMS IP ASSETS

13 Fairfield Resources International Inc u MAXIMIZE RETURN ON INTELLECTUAL PROPERY –IP IS LIKE ANY OTHER ASSET, EXCEPT: »Highly Profitable Return »Short Shelf Life u SECURE FREEDOM OF ACTION THROUGH CROSS-LICENSING –Assure Developers Not Blocked u PROMOTE OPEN SYSTEMS AND GREATER USE OF IBM TECHNOLOGY –Facilitate Industry Standards –Assure Widespread Software Availability For Customers u GAIN ACCESS TO OTHER TECHNOLOGIES u SUPPORT VENDOR & MANUFACTURING RELATIONSHIPS IBMS LICENSING OBJECTIVES

14 Fairfield Resources International Inc u 1988 REVIEW CONCLUDED: –Others Were Capitalizing On IBMs R&D –Royalty Rate Of 1% Sales Was Too Low u INCREASED RATES u LAUNCHED MAJOR LICENSING CAMPAIGN –Modest Staff Increase –Major Involvement of Business Units »ANALYSIS, INFRINGEMENT PROOF, PATENT REVIEW, INCREASED FILING u RESULT: –Revenue Grew Over From Tens Of Millions to $1.3 Billion in 10 Years –All Income Credited To Divisions –Minimal Litigation IBM LICENSING

15 Fairfield Resources International Inc IBMs Licensing Income

16 Fairfield Resources International Inc u RESOURCE REQUIRED –GOOD PATENT PORTFOLIO –EXCELLENT PATENT STRATEGY & MANAGEMENT –ANALYTICAL –LEGAL –NEGOTIATION –ADMINSTRATION u A COHERENT LICENSING PROGRAM –TERMS & CONDITIONS PERCEIVED AS REASONABLE –CONSISTENT & FAIR APPROACH –A SUCCESSFUL TRACK RECORD KEY FACTORS TO LICENSING SUCESSS

17 Fairfield Resources International Inc u INTERNAL CONSENSUS –CONVINCING INTERNAL OWNERS –LICENSING COMPETITORS –SELLING SENIOR MANAGEMENT –CALMING THE LAWYERS u RISK OF LITIGATION –DECLARATORY JUDGEMENT ACTIONS –NEED TO ENFORCE u EXPOSURE TO RETALIATION KEY FACTORS

18 Fairfield Resources International Inc u THE CROWN JEWELS ARE OFTEN UNDER VALUED While Growing In Value, IP Can Produce a Steady Stream of Profits u LICENSING AS A BUSINESS CAN YIELD SURPRISING RESULTS Your Revenues = Competitors Expenses LESSONS LEARNED

19 Fairfield Resources International Inc WHOS CRAZY NOW? LICENSING THE CROWN JEWELS


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