IP portfolio management Maaike van Velzen Philips Intellectual Property and Standards April 03, 2011

Agenda Introduction to Philips IP&S in the Philips organization Philips IP strategy Value creation from IP in Philips IP portfolio management IP scouting & acquisition Conclusions

A well-respected, blue-chip company for 120 years Founded in 1891 Headquartered in Amsterdam, the Netherlands Sales over EUR 25.4 billion in 2010 (USD 33.8 billion) 33% of sales generated in emerging markets Globally recognized brand (world top 50) Our brand value doubled to $8.7bln since 2004 119,000 employees Sales and service outlets in over 100 countries €1.6 billion investment in R&D, 6% of sales 50,000 patent rights – 36,000 registered trademarks – 63,000 design rights

IP&S in the Philips organization IP&S is part of Corporate Technologies Organized in business groups that match the Philips sectors Working closely with research and the sectors Bothell Cleveland & Burlington Redhill Eindhoven Aachen Beijing Seoul Tokyo Shanghai Taipei Hong Kong Jakarta Singapore Bangalore Mumbai Paris Madrid Sao Paolo San Jose Buenos Aires Shenzhen Mexico Briarcliff Pittsburgh

Facts & Figures Philips IP portfolio Number of patents (=inventions) filed in 2010: 1300 50,000 patents 36,000 trademarks 63,000 designs 3,900 domain names Philips Intellectual Property & Standards 26 IP&S offices worldwide in 16 countries 450 IP&S employees: 300 IP professionals , 150 support Founded in 1924

Maaike van Velzen Responsible for Healthcare IP portfolio activities within IP&S Includes all types of IP Worldwide Portfolio built from in-house inventions and acquired IP CV: 2008 – Philips IP&S IP portfolio manager Innovation and emerging business 2005 – 2008 Philips IP&S IP counsel 1996 – 2005 Unilever IP counsel <1996: Masters degree in chemistry

Philips IP Strategy Create IP solutions to support growth, competitiveness and profitability of Philips’ Sectors Create own IP positions that can be leveraged in the market for Sector benefits (building IP control points) Establish standards together with third parties to create or support business opportunities for Sectors Manage risks w.r.t. third party IP to avoid businesses being blocked and/or to secure access at favorable terms Counsel Sectors in IP matters in transactions with third parties to safeguard IP interests of Sectors IP focus is on creating value

“A Business strategy without IP strategy is no strategy” Philips IP Strategy IP strategy has to be integral part of business strategy : “A Business strategy without IP strategy is no strategy” Strategy alignment with Sectors and Research through: Participation in strategy meetings Sectors Discussion of IP&S strategy and annual plans with Sector/BU/CTO management Quarterly meetings IP&S BG management teams and Sector management teams Sectors Research IP&S Strategy Operational Plans Execution

Value creation from IP in Philips Royalty income Royalty savings via cross licenses Exclusivity Market share/margins Assign/license patents to obtain share in JV's / spin-ins/outs

IP portfolio management Define IP needs of Business Define IP value model and IP policy per BU File IP on own ideas and/or acquire IP from 3rd parties Ensure benchmarking of competition Make SWOT of own portfolio and major competitors Build and prune portfolio

IP portfolio management Annual IP Portfolio Management Plan per Sector with detailed plans for each Sector BU IP creation follows technology / product lifecycle We look at the different IP rights together i.s.o in isolation in order to create optimal protection and enforcement opportunities for BU’s Patents TM Designs DN IP Portfolio Management Plan Trade Secrets Copyrights

IP scouting & acquisition Scout market on availability of IP based on IP needs Use extensive network of brokers If matching IP is found, make business case to assess and determine value of IP Acquire or in-license the IP when price is within pre-determined range

Lean and mean IP portfolio Monitor costs biomarker filings with multiple selected groups generally expensive Do not go too fast at beginning Review portfolio at least every 3 years Go through the cycle Add young IP for future of business

Conclusions Managing IP has to be done with IP value model in mind No business strategy without IP strategy IP value creation comes as revenues and cost savings/benefits Central management of IP is effective and allows to run it as a business Strengthen IP portfolio through IP scouting and IP acquisition Thank you for your attention ! Maaike.van.Velzen@philips.com