ALSTON + BIRD LLP Maximizing Your IP In A Minimized Economy Alston & Bird Charlotte, North Carolina April 15, 2009 Presented By: Michael D. McCoy Richard M. McDermott

ALSTON + BIRD LLP Maximizing Your IP Three Key Topics -The business strength in IP -Benchmarking and best practices - Protecting strategic assets

ALSTON + BIRD LLP Patent Power Jan 14, 2009: IBM announces it was the first company to receive 4000 U.S. patents in a single year.

ALSTON + BIRD LLP Business Strength of IP The American IP sector is strong. IP Exports USA$62B Japan$20B -Royalties and license fees - Exclusive of revenue and profits from partnerships and JVs (Blaxill, Eckardt)

ALSTON + BIRD LLP Rewards of Research Companies with $100M+ market value that increased R&D in (Capital IQ, Bloomberg, BW, 2/09)

ALSTON + BIRD LLP IP Power 2007: Business Week Innovation Index Up 7% over S&P Global Index Sep. 2008: Innovation Index Up 9% S&P 500, Down 15% “The top performing companies in America shows innovation remains a powerful engine of success.” Business Week, Top 50, April 2009.

ALSTON + BIRD LLP IP Benchmarking Trend of Product Protection 58% - Much more protected 25% - Somewhat 17% - The same 0% - Less protected --(Aberdeen Group)

ALSTON + BIRD LLP IP Benchmarking Strategic Drivers – Using IP to Protect: –56% Design –48% R&D investment –43% Product differentiation –36% Market share --(Aberdeen Group)

ALSTON + BIRD LLP IP Benchmarking Consequences of failing to protect IP: –48% Lost market share –44% Lost product sales –30% Commoditization –27% Low margins --(Aberdeen Group)

ALSTON + BIRD LLP IP Benchmarking Corporate priority for IP –69% “Top Five,” or “active focus” Executive “ownership” of IP –74% Executive level –26% Senior manager, manager --(Aberdeen Group)

ALSTON + BIRD LLP Harsh Reality Weak earnings Declining revenue Lower stock valuation “Right – sizing”

ALSTON + BIRD LLP IP Growth and Budget Cuts Challenge: Strengthen IP with dwindling resources Key: Long term strategic approach All IP: –Patents –Trademarks –Copyrights –Trade Secrets

ALSTON + BIRD LLP Best Practices - Strategy Key: Treat IP as an asset, not an expense. –Identify strategic markets (5 years out) –Direct R&D –Continue IP programs –Continue incentives –Use in-house talent to harvest IP –Quality counts

ALSTON + BIRD LLP Best Practices - Prioritize Prioritize disclosures –Future? Core? End of life? –Critical feature “Sizzle”? Prioritize markets –US? Foreign? Where? –Sell? Manufacture? –Competitors present? If important – protect If not – sell or donate

ALSTON + BIRD LLP Best Practices – Map IP Map IP to products –Your products –Competitor’s products –Business units –Technology segments Profile competitive IP portfolios Analyze evolving IP portfolios –Be acquisitive –Universities

ALSTON + BIRD LLP IP Map: Competition Computer Scanning Processing Products Optics Imager Illumination Portable Slot Presentation Fixed Finder Decode Image Preparation Issued Patent License Agreement

ALSTON + BIRD LLP Best Practices – Out License Out license IP for revenue –Core v. non-core –Geographic territories –Market segments Monetize IP IP holding company

ALSTON + BIRD LLP Parent IP Group Inc. Holdings Strategic PartnersOther Affiliates Royalty Company License Company IP Management Company Marketing Company Third Parties IP Holding Company

ALSTON + BIRD LLP Best Practices – Manage Licenses Manage IP licenses –Dates –Milestones –Reports –Payments Audit –81% misreport royalties –40% underreport by 40+% (Invotex Group, 4-09)

ALSTON + BIRD LLP Patent v. Trade Secret Duration: 20 years v. unlimited potential Disclosure: full v. none Cost: significant v. modest Technology: Secret or public (product v. process) Rights: Federal v. 50 states Remedy: Injunction, exclusion order v. limited injunction

ALSTON + BIRD LLP Patent v. Trade Secret Infringement: Make, use, sell, import v. misappropriation Enforcement: Exclusion of all v. Misappropriation (except innocent user) Implementation: US PTO v. security –Visitor logs, badges, escorts, restricted areas –Notices, education, –NDA’s, employment agreements –Hiring, exit interviews

ALSTON + BIRD LLP Recognizing and Protecting Key IP Identify key products, markets Review products, packaging, marketing materials, etc., for IP to be protected Prioritize IP to be protected based on product, market, cost and value of protection Evaluate what aspects or attributes should be protected. Example:

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ALSTON + BIRD LLP CUT-AWAY

ALSTON + BIRD LLP another 5F product Starr Industries Inc. brand name (trademark) logo (trademark) tagline or slogan (trademark) package design (trade dress/trademark) company name (trade name) colors (trademark) scent (trademark/trade secret) FRONT

ALSTON + BIRD LLP the HiFi-WiFi-MP3-PDA- Satellite Radio-HDTV- Cell phone solution for the ages! the HiFi-WiFi-MP3-PDA- Satellite Radio-HDTV- Cell phone solution for the ages! Long ago, in a design shop, far far away, a shy, awkward technogeek stumbled on the invention of the ages – Are YOU 5F? Far Flung Forward Fun Fashion BACK Starr Industries those wonderful people who brought you edible hair gel! advertising copy, images and layout (copyright) image (copyright/trademark) tagline/slogan (trademark) brand name (trademark) domain name (trademark)

ALSTON + BIRD LLP CUT-AWAY packaging configuration (design patent/trade dress) functional feature (utility patent) proprietary treatment (trade secret)

ALSTON + BIRD LLP Design Patents Consider alternative, generally lower-cost protection, such as design patents, if appropriate. A “utility patent” protects the way an article is used and works (35 U.S.C. 101), while a “design patent” protects the way an article looks (35 U.S.C. 171). Both design and utility patents may be obtained on an article if invention resides both in its utility and ornamental appearance. Articles of manufacture may possess both functional and ornamental characteristics. Examples:

ALSTON + BIRD LLP Design Patents

ALSTON + BIRD LLP Design Patents

ALSTON + BIRD LLP Recommendation Get your Assets in Gear™ “No company has ever saved its way to success.” --(Anonymous)

ALSTON + BIRD LLP Maximizing Your IP In A Minimized Economy Alston & Bird Charlotte, North Carolina April 15, 2009 Presented By: Michael D. McCoy Richard M. McDermott