1. IP Licensing at Hewlett-Packard Patent Engineering Lecture Joe Beyers Vice President, Intellectual Property Licensing Hewlett-Packard Company March 12 th, 2008

2. 2HP Confidential Lecture Outcome Introduction HP Patent management process HP IP Licensing Critical IP Business issues General Discussion/Q&A

3. 3HP Confidential

4. 4 HP Invention Patenting Process #1 Innovative idea by an engineer #2 Invention disclosure filed - Cash reward #3 Invention disclosures prioritized and a subset turned into patent applications #4 Patent issued - Cash reward #5 Ongoing maintenance fees paid

5. 5HP Confidential HP Invention Patenting Process #1 Innovative idea by an engineer *Invention workshops #2 Invention disclosure filed - Cash reward *Those not filed are published #3 Invention disclosures prioritized and a subset turned into patent applications * Those whose claims are severely restricted are abandoned #4 Patent issued - Cash reward * Annual prioritization of issued patents to identify patents to let lapse or to be sold #5 Ongoing maintenance fees paid *= Ongoing invention asset management

6. 6HP Confidential Figure 1 Evolution of the HP’s IP Strategy IP creation to develop and ship products Use of IP to protect core product categories ADDED: Leverage of IP for Increased revenue/value Use of IP to enable greater freedom of action January, 2003 90’s 70’s & 80’s 50’s & 60’s Main focus on shipping products Cross licenses with major companies Enforcements of IP in selected products segments Rapid increase in patent filings Launch of IP licensing function IP Actions by HP TimeframeStrategic Importance of IP

7. 7HP Confidential Actions of the HP Board in January 2003 Key Decision Significant strategic shift in how HP views the importance of intellectual property – patents, copyrights, trademarks and trade secrets - Protection - Value beyond traditional product revenue Specific Actions 1.Movement of HP IP a into wholly owned affiliate 2.Required central approval for any out-licensing of HP intellectual property or any non-assert agreement 3.Created an IP licensing function

8. 8HP Confidential Elements of the HP IP Licensing Function IP strategy and outlicensing approval process IP licensing HP IP infrastructure Drive strategies to better protect HP’s IP Enhance HP’s design freedom Drive actions to obtain greater value for HP’s IP Revenue flow to the business units Build the infrastructure to support the strategy and licensing activities

9. 9HP Confidential any Open Source action any Standards body action any University agreement (with IP) HP IP Approval Process any Trademark license Supply Chain IP Indemnity Review Board Standards Strategy Review Board University Agreement Review Board Brand Mgt. Open Source Review Board any non- standard IP Indemnity action all other IP actions Results: Reviewed more than 6,000 deals since January 2003 More than 50% incurred significant changes

10. 10HP Confidential IP Training & Awareness Program Objectives: Communicate IP Strategy Fundamentals (Invent, Protect, Leverage) Strengthen protection of HP’s IP Shift mindset to broadly apply “Strategic Leverage” of IP HP-wide IP Training Courses Launched online “IP @ HP: An Overview” training class; required for all Technical Career Path (TCP) and key HP Services functions (~60,000 employees total) Additional single-focus IP courses planned (IP Indemnity; Open Source; Standards) Results: Over 30,000 employees have completed the course Several new opportunities for IP Licensing have been forwarded to IPL Companies have approached IPL to license the course

11. 11HP Confidential IP Tools Disclose Disclosure system inaccurate Merlin Internal database Legal database Restricted most- complete Complete Patent Portfolio Public Services 1 Populate Structured Database Scalable Complete portfolio Segmented by technology & product 2 Search & Analytic tools Sophisticated lookup tables keyword cross reference several Databases 3 Mining Portfolio concentration of patents in product categories ID valuable markets patent synthesis & overlay 4 Facilitate quick identification of patents for licensing initiatives 5 Project Capture Capture knowledge from active licensing programs for collaboration Assists future programs Magic Patent Analysis / Collaboration Taxonomy

12. 12HP Confidential IP Tools - Screenshots

13. 13HP Confidential HP Patent Licensing Opportunities Areas of concentration/ strength Areas of weakness Licensing Opportunities Patent Acquisition Internal Development Potential Licensing Initiatives Potential Mega Targets Proactive Patent Acquisition Process Enrichment of Portfolio –Focused R&D –More aggressive filing –Greater country coverage –More maintenance renewals –Improved protection HP Patent Taxonomy

14. 14HP Confidential HP’s IP Assessment / Actions IP Monetization IP Design Freedom - Specific, Broad IP Defensive Actions Analysis of HP’s IP Portfolio Analysis of Other Company’s Products and IP Portfolio High Low Low High Relative IP Strength Relative IP Exposure

15. 15HP Confidential HP IP Licensing Business Segments 1.Technology Licensing 2.Brand Licensing 3.Patent Sales 4.Standards Licensing 5.Patent licensing/assertions Subtotal# projects 150 6. Patent/license acquisition 7. IP Strategy Revenue Generation Non Revenue Generation

16. 16HP Confidential HP IP Value Results - $M 0 FY03FY04FY05FY06FY07 $ Millions November 15, 2006

17. 17HP Confidential Figure 2 Types of Enterprise Value created by an IP licensing Function Primary performance measure Secondary performance measure “Atta-boy” measure IP Cash IP ValueIP Strategic Value Cash income that: a) Is tied directly to an IP transaction b) Is truly incremental c) Is “recognized” in the P&L Examples include: - Upfront cash payments - Royalty payments - Other cash payments, that may appear as a cost of sales or operating expense reduction Other forms of value that: a) Is tied directly to an IP transaction b) Is truly incremental c) Is measurable d) Directly affects some aspect of the P&L Examples include: - Purchasing discounts/rebates - Elimination of current cash liabilities - Gross margin on incremental product purchases Value that is likely to be beneficial to the company’s operating profit but may be difficult: a) to accurately quantify or b) to prove that it was the sole/direct contributor Examples include the reduction/eliminations of: - litigation liabilities - assertion liabilities - the cost of an IP License

18. 18HP Confidential 250 0 FY07FY08FY09FY10FY11 Figure 3 : IP Revenue Recognized or Forecasted By Year Deal Closed 2010 Closed 2009 Closed 2008 Closed 2007 Closed Closed prior to 2007

19. 19HP Confidential Legal-Led vs. Business-Led IP Licensing Legal-LedBusiness-Led Precise Methodical Risk Adverse Passive IP for Defense Entrepreneurial Innovative Risk Tolerant Proactive IP for Offense

20. 20HP Confidential $M New Patents Asserted Product Purchase Commitment New Product line HP – Company X Patent License Agreement $M Current License $M Paid $M Due $M Gross Margin $M

21. 21HP Confidential $M New Patents Asserted Product Purchase Commitment New Product Line HP – Company X Patent License Agreement $M Current Disc License $M Paid $M Due $M Gross Margin $M

22. 22HP Confidential Major IP Landscape Shifts IP viewed as a strategic corporate asset Patent reform IP protection in emerging markets Open source Digital rights management Patent auctions Patent trolls

23. 23HP Confidential “Patent Trolls”

24. 24HP Confidential IP Dynamics Between Operating Companies and Patent Trolls PRODUCTS IP PRODUCTS IP Company APatent Troll Net Balance of IP Value Company ACompany B