1. Halevy Greenberg & Co. L A W O F F I C E S Gross Kleinhendler Hodak Practical IP Issues and Challenges in Israeli Companys Ordinary Course of Business Amir Halevy, Adv., Managing Partner Renana Dolev Harel, Adv., Head of IP Dept.

2. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 2 5 th of December, 2005 Introduction Lecture Outline: Safeguarding your IP Exploiting your IP

3. Halevy Greenberg & Co. L A W O F F I C E S Gross Kleinhendler Hodak Part I Safeguarding Your IP

4. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 4 5 th of December, 2005 Incorporation of Commercial Entity Rights to IP / Assignment of IP Protection of IP Patents/Trade marks Confidentiality and Non-Disclosure Non-Compete

5. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 5 5 th of December, 2005 Investment and M&A Agreements Term Sheet Due Diligence Agreements Exhibits

6. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 6 5 th of December, 2005 Term Sheet Technology IP Rights Confidentiality Non-Compete

7. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 7 5 th of December, 2005 Due Diligence Employment Agreements with previous employers Non Compete Rights to IP Rights of Third Parties Non Infringement of IP Rights Universities/R&D Institutions License/Royalties Patent Attorney Opinion

8. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 8 5 th of December, 2005 Investment and M&A Agreement Precise Definitions Good Title Good Standing License/Royalty Security Measures Non Infringement Company Rights Third Party Rights Israeli Research and Development Law, 5744-1984 Indemnification Company Views Investor / Buyer View

9. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 9 5 th of December, 2005 Israeli Research and Development Law, 5744-1984 Law applies to all companies who receive grants from the Israeli Chief Scientist, even after full return of the grants. Latest Amendments Manufacturing outside of Israel Exits by sale of know-how to non-Israeli entities

10. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 10 5 th of December, 2005 Israeli Research and Development Law, 5744-1984 Transfer of know-how abroad: Sale or transfer of know-how Allowed after receipt of approval Subject to repayment formula to be agreed on in future regulations Transfer of know-how in exchange for the transfer of substitute know how to Israel Committee may approve transfer of know how with no additional charge

11. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 11 5 th of December, 2005 Israeli Research and Development Law, 5744-1984 Manufacturing Abroad Obligation to Israeli portion of product manufacture unless: Impossible Unrealistic Uneconomical Manufacturing abroad allowed without transfer (sale) of know-how Terms : Manufacturing of up to 10% - no approval required Manufacturing of more than 10% - approval required may be subject to a lump-sum compensation of up to 120% of the grant amount

12. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 12 5 th of December, 2005 Exhibits Assignment Agreement Employment Agreement Rights to IP Non Compete IP Status reports Opinion of IP Counsel and Patent Counsel

13. Halevy Greenberg & Co. L A W O F F I C E S Gross Kleinhendler Hodak Part II Exploiting Your IP

14. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 14 5 th of December, 2005 Israel is a Leading Nation in IP Production But Do We Know How to Protect It?

15. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 15 5 th of December, 2005 Intangible Assets Value > Tangible Assets Value Soaring Patent Filings Ability to Freely Operate is Difficult to Ascertain Problem: Patent Explosion

16. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 16 5 th of December, 2005 Solution: IP Analysis Plan before acting! Receive perspective on patent coverage and danger zones: Relevant technologies Blocking patents and potential design-arounds Mitigation of infringement threat Companies and inventors in the space

17. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 17 5 th of December, 2005 Patents are like Real Estate Infringement Assignment License Security Interest Patent Maintenance Fees Patent Office Registration Design, Market, Sell Position w/ Tech. & Market Scope of Claims How well patent prepared Trespass Sale Lease Mortgage Annual Property Tax Title, Registration Design, Build, Exploit Location Square Footage Finishes Source: Morrison & Foerster LLP

18. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 18 5 th of December, 2005 The Patent Landscape DANGER ZONE Fortress Blocking Unclaimed Valuable Land Valuable Land The Market Big House Bad Location Public Land/ Prior Art Invalid Patent Technical Standard Source: Morrison & Foerster LLP

19. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 19 5 th of December, 2005 When and why should you perform IP Analysis? IP audit and valuation Patent strategy and portfolio development Transactions Merger & Acquisition (in new business area) Joint Venture Licensing Joining standards group or licensing pool Freedom to operate Understanding competitor patent position Identify opportunities for future R&D

20. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 20 5 th of December, 2005 IP Evaluation Process Perform Search Define Scope Select Patents of Interest Map Trends Analyze Patents Design Around? Display results Investigate Owners Mitigate Infringement

21. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 21 5 th of December, 2005 Return of Investment – IP Exploitation Secure financing Royalties Protect market share Deter third party infringement suits Acquire a license to competitors patent Provide a bargaining chip Collaborations

22. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 22 5 th of December, 2005 Business Aspects of Licensing Agreements Nonexclusive v. Exclusive Worldwide v. Defined Territory – geographical parameters. Perpetual v. Specific Time Frame – temporal parameters. Irrevocable Nontransferable Royalty Free v. Royalty Bearing Unrestricted Use v. Field of Use

23. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 23 5 th of December, 2005 Time is Money – Perpetual v. Irrevocable Perpetual license Irrevocable license Perpetual license or Non-Perpetual license can be revocable or irrevocable. Analogy – perpetual regards a string of infinite length; irrevocable regards a string (of any length) that cannot be cut.

24. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 24 5 th of December, 2005 Field of Use Unconstrained rights to use or make commercial use of intellectual property. Limitation of use through definition of Field: by product by function performance criteria physical characteristics markets combination with other products or technology technical or use aspects

25. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 25 5 th of December, 2005 Field of Use Tailored to the technology. Value of the license according to scope of granted rights. Specification of future trends, research, technology, etc. – prefer a non-generic clause.

26. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 26 5 th of December, 2005 Revenues and Compensation Nonrecurring Fees v. Recurring Fees Nonrecurring Fee Recurring Fees: Periodic fixed fee. Royalties - volumes or percentage of revenues. Royalty terms vary according to licensed technology, license scope and exploitation.

27. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 27 5 th of December, 2005 Business Leverage in License Termination Expiration v. Automatic Renewal Adjustments usually require agreement of all parties Leverage for Licensee –no change in terms if the parties cannot agree, but the renewal term will commence anyway. Leverage for Licensor – the term of the license shall end without renewal if the parties cannot agree on new terms.

28. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 28 5 th of December, 2005 Surviving Termination No Post Termination Rights v. Post Termination Rights Ability to meet customer orders received. Rights of use but no rights to title. Freedom to operate Non-Compete

29. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 29 5 th of December, 2005 Business Collaboration with Universities/R&D Institutions

30. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 30 5 th of December, 2005 Income of $39M in 2005 to TTC of the Hebrew University

31. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 31 5 th of December, 2005 IP of University/R&D Institutions Technology Transfer Company (TTCs/TTOs) Converting scientific findings into commercial assets Ownership of IP resulting from university employees Profit making company Identification and protection of IP Assist researchers in finding potential investors and in creation of profitable license deals/spin-out companies Cash incentives - substantial amount of the profits (usually 40% or more) back to the researcher and his team

32. Halevy Greenberg & Co. L A W O F F I C E S Gross Kleinhendler HodakQ&A

33. L A W O F F I C E S Gross Kleinhendler Hodak Halevy Greenberg & Co. 33 5 th of December, 2005 Thank You Contacts:amir@gkh-law.comrenana@gkh-law.com