1. 1 Building a Portfolio with Licensing in Mind SEVENTEENTH ANNUAL ADVANCED LICENSING INSTITUTE PIERCE LAW CONCORD, NEW HAMPSHIRE JANUARY 6, 2009 Peter Y. Lee Thermo Fisher Scientific Inc. Waltham, MA

2. 2 Goal: build portfolio for licensing R&D, ideas People Technology, products Intellectual Property Portfolio of patents having: -high quality** -focused claims targeted** on an industry/activity/product with value –capturing a product/method in a convenient link of the value chain; susceptible to litigation & extracting a royalty; with manageable number of defendants, in enforcement-friendly jurisdictions -sufficiently broad to avoid design-around -but not so broad as to be easy to undermine/invalidate

3. 3 What is IP? Know what is IP & how to enforce it? what portfolio is desired how to build portfolio what is strategy for doing it well get high quality portfolio! E.g.: what is a patent? –Geographic: US vs. DE vs. China? –Time: 2015 vs. 2000 vs. 1975? –Industry: pharma & biotech industries behave differently than computing, oil/energy, automotive... –Big, Medium companies, start-ups, behave differently

4. 4 What is IP? Example: Gutenberg Bible, 15 th C. Germany

5. 5

6. 6 16th century

7. 7 1452

8. 8 Lesson learned by Gutenberg: Without patents, the future of your business may be owned by someone else 15 C. Mainz, German State

9. 9 Which IP rules do you presume? 1.Do you know the legal/political rules? 1450 Mainz rules? 2008 US CAFC rules? Or 2015? PRC, UK, DE 2015 rules? 2.What non-legal practices and presumptions apply in this industry? Pharma/biotech/university Oligopolistic conservative industry: Oil/energy, automotive Oligopolistic over-patented industry: semiconductor, computing Billion dollar product patents (e.g. iPod, Blackberry) vs. small niche product patents (e.g. pipette instrument) 3.Who do you license to, or not?

10. 10 Which innovation should Gutenberg target to patent? Apparatus claim: printing press having mechanical actuator to multiply the force on palette without destroying the holding frames Method claim: Method of printing using moveable, castable type bound in frames, with a high pressure printing press Chemical claim: ink formulation based on new understanding of chemistry of mixing diverse immiscible ingredients to form inks with appropriate adhesion properties for vellum (also trade secret) Manufacturing claim: method of manufacturing inks using certain binders, emulsifiers and temperature control (also trade secret) Product claim: the cast type, adapted in size/shape to accommodate the moveable type frames Product claim: The printed book having a combination of printed portions and hand illustrated portions Question: Which one claim would you vote for, to license out? Why?

11. 11 What part of the value chain is most accessible, efficient, and valuable? Apparatus claim: May be obvious, in view of printing of wood blocks May be easy to design around Infringer can do printing offshore Capture whole value of printing operation; one suit per printing company - efficient Royalty based on value of printing press? (lower than books?) Method of printing claim: May be possible to design around, but use of binding frames is new Infringer can do printing off shore Royalty based on value of type, or of press, or of all output? Chemical ink formulation claim: Is it better to keep it trade secret? Royalty based on premium ink prices? (lower value than books) Manufacturing of ink claim: Is it better to keep it trade secret? Royalty based on cost of manufacturing ink? (lower value than ink?) But may have other uses in other applications... Type product claim: Royalty based on cost of type But if you can get injunction, you can corner the moveable type market, and this can be efficient way to collect royalties? Can be designed around? Printed Book product claim: Nice try, but is it really patentable? Royalty on every printed book; but how to sue each owner of a book...

12. 12 Attributes of Portfolio to enable effective licensing Multiple patents with overlapping claims may strengthen licensing position –Make it impossible to design around all claims –If Gutenburg had all of his potential claims... Claims of different types (apparatus, method of use of apparatus, components, input material to method, etc.) can capture different aspects of value chain, to maximize value –E.g. Roche/Applera patents on PCR process, PCR thermal cycler, PCR reagents Should have patents in the key jurisdictions, to cover key markets. Licensing out technology/knowhow/support together with patent rights – delivers greater value to licensee; greater receptivity Need team including marketing, financial, technical, and IP/licensing personnel. Licensing is a business. Need litigation capability & track record to be most effective.

13. 13 Why do you license out? 1.Revenue; profit center (e.g. universities; life sciences; IBM; TI; patent trolls) 2.As part of industry patent pool & cross license 3.As outcome of litigation / injunction settlement 4.As one component of competitive strategy 5.As by-product of merger, acquisition, divestiture Question: Which type is most common?

14. 14 Why would you not want to initiate cross licensing? Company A owns patent A Company B owns patent B Company C owns patent C, and has small market share They compete directly, and all sell products 1, 2, 3. Question: Who has highest potential for profit, in a cross-licensed world?

15. 15 IP licensing - exchange Product 1 Prod. 2 other products Comp. A Patent A Comp. B Patent B Comp. C Patent C

16. 16 Do you want to start a patent war? Game theory: prisoners dilemma

17. 17 How to produce a targeted and quality IP portfolio in an organization? Need to create organizational building blocks (understanding) to enable strategy formation Need policy, practice, infrastructure to ensure quality IP Need excellent people Need coherent direction, support, and confidence produce quality, targeted portfolio

18. 18 Act Know Understand Think Implement IP goals Formulate IP strategy for business or a key product How to extract IP Value? How to control IP Risk? Process to analyze & comprehend (e.g.) patents: technology road map external patent terrain internal patent/ID portfolio Identify IP Risk using: Policy Best practice Training Legal Support What patents do we own? business. corporate Others patents: Competitors Customers Suppliers 3 rd parties Tech Watch Patent Watch Market Intelligence Signed Contracts, R&D agrt, employee agrts, etc. Unsigned Contr. - what risk? Custmr/Supplier - IP Leakage - IP Title IP Quality PTSSoft Knowhow X-Bus. IP PTSTitleSoft Collab.Cust.Supplier Emp.Consult IP Strategy Building Blocks

19. 19 Typical pre-licensing assessment / pre- litigation review 1.Check quality of patent 2.Confirm title, assignment of inventor rights (intl variations) 3.Assess infringement evidence, value chain/damages estimates 4.Interview crucial witnesses, rev. history of invention & prosecution 5.Assess targeted defendant; formulate tactics of counter-strike and escalation 6.Plan settlement scenarios; understand strengths & weaknesses 7.Determine budget & time line

20. 20 What should have been done earlier to produce effective Portfolio? Check quality of patentQuality Patent Confirm title, assignment of inventor rights (intl variations) Quality of Title Assess infringement evidence, value chain/damages estimates Strategy & Targeting Interview crucial witnesses, rev. history of invention & prosecution Quality of Prosecution Assess targeted defendant; formulate tactics of counter-strike and escalation IP Strategy Plan settlement scenarios; understand strengths & weaknesses Determine budget & time line

21. 21 Act Know Understand Think Implement IP goals Formulate IP strategy for business or a key product How to extract IP Value? How to control IP Risk? Process to analyze & comprehend (e.g.) patents: technology road map external patent terrain internal patent/ID portfolio Identify IP Risk using: Policy Best practice Training Legal Support What patents do we own? business. corporate Others patents: Competitors Customers Suppliers 3 rd parties Tech Watch Patent Watch Market Intelligence Signed Contracts, R&D agrt, employee agrts, etc. Unsigned Contr. - what risk? Custmr/Supplier - IP Leakage - IP Title IP Quality PTSSoft Knowhow X-Bus. IP PTSTitleSoft Collab.Cust.Supplier Emp.Consult IP Strategy Building Blocks

22. 22 Peter Y. Lee Chief Counsel, Intellectual Property Thermo Fisher Scientific Inc. 81 Wyman Street, Waltham, MA 02451 peter.lee@thermofisher.com www.thermofisher.com/ Peter Lee has been engaged in the practice of IP law for over 25 years, starting out in private practice in Philadelphia at Synnestvedt & Lechner, moving on to an in-house counsel position at Schlumberger Limited, and ultimately becoming Chief Counsel, Intellectual Property at Thermo Fisher Scientific - the premier provider of analytical instruments, scientific equipment, reagents, consumables and laboratory supplies in the world. In his current capacity, Peter has responsibility for IP related legal matters of Thermo Fisher, including litigation in the US and other jurisdictions. Although primarily a US-trained lawyer, Peter is originally from the Far East, speaks Mandarin, and has participated in the evolution and development of Chinas patent system since its creation in 1984. He helped to train the initial teams of patent examiners, lawyers and judges starting 1985, and has represented US and European IP owners in settling IP disputes in China over the years. From 1991 to 2001, Peter was the International IP Counsel of Schlumberger Oilfield Services, and then the general counsel of Schlumberger Research, based in Cambridge, England. In these capacities Peter managed contentious and non-contentious IP and research–related matters in European jurisdictions such as the EPO, UK Patent Office, the European Commission, and the national courts of England, Scotland, France, Germany, and Norway. He has assisted in various legal initiatives at Schlumberger, such as to create a distributed research network in the former Soviet Union, and to set up a research center in Saudi Arabia. Peter has an AB degree in physics from Princeton University, and a JD degree from Boston College Law School. He has been a member of Literacy Volunteers of America (Connecticut section), a member of the board of governors of the Newnham Croft School, Cambridge, England, and a volunteer mentor at the Snowden School, Boston. He has chaired various subcommittees of the American Bar Association, concerning Trade Secrets Law and China IP Law, and is currently a member of the ABA, AIPLA, ACPC, and AIPPI.