1. Intellectual Property Law © 2007 IBM Corporation David J. Kappos VP & Assistant General Counsel Globalization & IP/Innovation for Council on Foreign Relations

2. Globalization & IP/Innovation – 2007 Intellectual Property Law © 2007 IBM Corporation 2 Globalization in a Changing World  Products can be made anywhere  Ideas can move instantly around the world  Collaboration is of increasing importance  Capital and raw materials, while important, do not define competitive advantage  Competitive advantage now lies in ideas, and the only way to protect ideas is through intellectual property laws Globalization is increasing the importance of Strong but Balanced Intellectual Property Rights in protecting the public interest

3. Globalization & IP/Innovation – 2007 Intellectual Property Law © 2007 IBM Corporation 3 US Patent System is Unbalanced  Obtaining Patents ► Over-protection Subject matter over-extension Erosion of patentability standard Gaps in examination ► Under-protection PTO pendency  Enforcement ► Damages & Lottery Mentality  Additional Problems ► Harmonization ► Inequitable Conduct ► Prior User Rights

4. Globalization & IP/Innovation – 2007 Intellectual Property Law © 2007 IBM Corporation 4 21 st Century Global IP System: Balanced Patent System  “ Open ” Patent Filing ► Protecting IP rights, but not over-protecting or under- protecting such rights ► Transparency of ownership and content of patents ► Global patent application  “ Open ” Patent Review ► Public contribution of comments/prior art during patent examination ► Collaborative examination by patent examiners ► Post-issuance challenges

5. Globalization & IP/Innovation – 2007 Intellectual Property Law © 2007 IBM Corporation 5 21 st Century Global IP System: Balanced Innovation  “ Open ” Collaboration ► Freedom to innovate across disciplines, geographies, legal systems ► Encourage universities and companies to work together in solving difficult problems ► Open Source: encourage both open and proprietary innovation models  “ Open ” Standards ► Create a fair and fertile environment for open standards and open source software ► Open participation and open implementation

6. Globalization & IP/Innovation – 2007 Intellectual Property Law © 2007 IBM Corporation 6 IBM Collaborative Innovation/Balanced Innovation University Innovation Summit  RPI, Georgetown, CMU, Georgia Tech, Stanford, University of Texas, University of California-Berkeley, University of Illinois, Cisco, HP, Intel, Kauffman Foundation Software Patent Pledge  500 Patents to Open Source Community Industry Patent Pledges  Healthcare  Education IBM Marketplace Wiki and Patent Policy IBM Inventor Forum Patent Quality Initiatives Standards Leadership  Open Technologies to Drive Standards  China Open Standards Focus  Emerging Market RFID Workshops Open Invention Network  Collaborative Trust with: Sony, Philips, Novell, Red Hat, NEC PatentsAlliances StandardsConstituencies