This presentation was given by Foresight Valuation Group President Efrat Kasznik at the UP Cloud Computing Conference in South San Francisco on December 12, 2012.

1. Intellectual Property Strategy:
Challenges and Opportunities
in the Cloud
Efrat Kasznik, Founder & President
Foresight Valuation Group, LLC
December 12, 2012

2. About Me: Efrat Kasznik
 Founder and President, Foresight Valuation Group (Palo Alto, CA), a Silicon-Valley
based intellectual property, valuation and start-up advisory firm.
 Lecturer on IP Strategy, Stanford Graduate School of Business (MBA class)
 Licensing Executives Society (LES), High Tech Sector - Leadership Committee;
Chair, Nanotechnology Committee
 Intellectual property (IP) valuation and strategy expert, with 20 years of
experience analyzing IP portfolios for mergers & acquisitions, financial reporting,
technology commercialization decisions, tax compliance, transfer pricing, litigation
damages and business liquidations.
 Work with corporate clients across industries, from Fortune 100 to start-ups, as
well as law firms, universities, research institutions, inventors, IP brokers and patent
funds. Extensive telecom expertise, including: AT&T, Avaya, Juniper Networks.
 Co-founder, CFO and adviser to startups in the fields of telecom, media, cleantech
and healthcare.
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3. Outline
 The IP (Patent) Marketplace in the US
 Mobile Wars
 Ecosystem and Forces
 Is the Cloud Market the next Litigation Battlefield?
 How is Cloud Similar to Mobile?
 Early Indicators of Patent/Litigation Activity
 What to Expect in the Next 5 Years?
 Best Practices in IP Portfolio Management
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4. The Mobile Patent Wars
Source: The Guardian and New York Times
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5. Multi-Billion Dollar Deals Involving IP
Apple, Microsoft, Google, the losing bidder
Research in Motion, EMC, in the Nortel auction,
Ericsson, and Sony announced the $12.5
joined together in a billion acquisition of
consortium to win an Motorola Mobility, whose
auction for the 6,000 IP portfolio includes
patents of the bankrupt 17,000 issued patents
Nortel at a price of $4.5 and 7,500 patent
billion. applications.
June 2011 Aug 2011
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6. Mobile Market Patent Activity
Redistribution of IP holdings through Land-grab and
Turf-wars…
 Global Litigation
 Global court battles: Apple-Samsung (2011)
 Non-Practicing Entity (NPE=”Troll”) litigation: NTP-RIM
$612.5 MM in damages (2006)
 Multi-billion Dollar IP-driven Transactions
 Patent
acquisitions: Nortel patent auction (2011)
 Company Acquisitions: Google/Motorola mobility (2011)
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7. A “Perfect Storm” in the IP Marketplace
IP Marketplace
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8. The New Patent Marketplace in 21st
Century – Rise of the Intermediaries
Enforcement
(Litigation)
IP Creators IP Users
- Operating Companies - Operating Companies
- Independent Inventors - Others
- Universities Patent Sales/licensing
- Research Institutions
- Gov’t labs Cross Licensing
Intermediaries:
•Non-practicing entities (NPEs)
•Patent Funds/Aggregators (Intellectual Ventures)
•Market Makers (Auctions, patent exchange)
•Financial services (securitization, litigation
finance)
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9. Is Cloud the Next Patent Battleground?
Attribute Characteristics Mobile Cloud?
Market Size Explosive Market, large economic stakes  ??
Products/ Multiple features in one product 
Services Multiple layers of Services in Platform 
IP Landscape Patent thicket – overlapping claims  ??
Business method patents – broad claims  ??
Competitive Incumbents with large IP holdings  
Dynamics Newcomers entering markets without IP  
NPE (trolls) patent holders  
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10. Market Size: Explosive Growth
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11. Products/Services:
Multiple Cloud Service Layers
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12. Cloud Patent Landscape:
Accelerated Patenting Activity
6000
5154
5000 4801
Cumulative Count of Patent Families
3867
4000
3000 2781
2090
2000
1556
1143
837
1000
512
248
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: Filing Year
 The search has been conducted from 2003 onwards.
 Number of patents for 2011 & 2012 may be incomplete because some of the applications might not have been published yet.
 The counts are indicative and not comprehensive.
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13. Cloud Competitive Dynamics:
Incumbents with Large Patent Holdings
800
Count of US patents Families
694
700
600
500
400
333
293
300
200
125 103 97 82 78 75
100 51
0
IBM MICROSOFT HEWLETT HITACHI ORACLE Hon Hai CISCO FUJITSU LTD AMERICAN NEC CORP
PACKARD Precision POWER
Industry CONVERSION
Assignee
Note:
 The search has been conducted from 2003 onwards. The subsidiaries of the assignees have not been considered for the analysis.
 Number of patents for 2011 & 2012 may be incomplete as some of the applications might not have been published yet.
 The counts are indicative and not comprehensive.
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14. Cloud Computing – Taxonomy
Cloud Computing
Architecture Management
Security (889) Services (2412) Storage (584)
(1237) (1761)
APIs Storage
Deployment Models Provisioning Access Control
System/Hardware
Cloud Engineering Load Balancing Fault Tolerance Web Services & Storage Platform
Technologies
Enterprise Applications
Virtualization Resource Management Cryptography & Secure Storage Virtualization
Transmission Mobile Applications
Performance Data Storage
Management & Billing Cloud Client Software
Cloud
Firewall/Gateways
Scalability & Software as a Service
Maintenance
Infrastructure as a
Bandwidth Service
Management
Platform as a Service
• Dell Service Cloud • Amazon CloudWatch • IBM Hosted Application • Amazon Relational • Cisco MDS 9000 Family
Implementation Security Management Database Service (RDS) Solution
• Amazon EC2
Packages
Products*
• Citrix Cloud Gateway • Apple iCloud • Amazon EC2 Instance
• BMC Cloud Lifecycle
• Oracle Automatic Storage
Management • Symantec.cloud • AWS Amazon Cloud Drive
Storage Management
• EMC VPLEX
• VMware vCenter • Symplified Cloud Access • IBM Sterling B2B
• VMware vSphere
Operations Management Manager Integration Services • IBM SmartCloud Archive
• Citrix Cloud Platform Suite
* Product list is indicative and not comprehensive
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15. Cloud Patents by Technology Area (Since 2003)
3000
2500 2412
2000
1761
Count of Patent Families
1500
1237
1000 889
584
500
0
Architecture Manangement Security Services Storage
Note:
 The search has been conducted from 2003 onwards.
 Number of patents for 2011 & 2012 may be incomplete because some of the applications might not have been published yet.
 The counts are indicative and not comprehensive.
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16. Cloud Litigation/Collaboration Trends
 No signs of litigation between any of the large IP
holders, not likely either
 Cross Licensing between large players
 Likely to see litigation between startups/large players
 Early signs of troll litigation
 Early signs of collaboration:
 Facebook’s Open Compute Project technologies as
open hardware: “… our goal is to develop servers and
data centers following the model traditionally associated
with open source software projects…”
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17. Troll Litigation is a Serious Problem!
“This year, about 61%
of all patent lawsuits
filed through
December 1 were
brought by patent-
assertion entities, as
compared to 45% in
2011 and 23% five
years ago”
Source: Patent Troll Cases Now
Dominated by “Trolls”, Study by
Colleen Chien, Reuters, December
10, 2012
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18. Are Trolls Coming to the Cloud?
“Patent Trolls Are Hindering Innovation at PersonalWeb Technologies
Rackspace—And Our Customers” (2011-2012)
-Alan Schoenbaum, SVP, General Counsel and Secretary at  Amazon/Amazon Web Services
 Autonomy
Rackpsace (October, 2012)
 Caringo
 EMC
 Google/YouTube
Clouding IP LLC (2012)  NEC Corporation of America
 NetApp
 Rackspace Hosting
 VMware
 Amazon.com / Amazon Web Services  Apple
 Apple  Dropbox
 Google  Facebook
 Microsoft
 Microsoft
 IBM
 Oracle  Nexsan Technologies
 Motorola Mobility  Rackspace
 Yahoo
Source: Pacer, CRN.com
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19. IP Strategy Throughout the Lifecycle
IP portfolio building Portfolio liquidation
Portfolio commercialization &
monetization
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20. The Chasm as a Critical IP Juncture:
Liquidation or Litigation?
Litigation
Liquidation
“About 35% of
startups that have
raised $50 - $100
million have been sued
on a patent, as have
20% of the companies
that have raised $20
- $50 million”
Portfolio commercialization & Portfolio liquidation
monetization
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21. Portfolio Building – Early Phase
Goals:
• Freedom to operate
• Block competitors
• Support future products
• Hedge against litigation
• Attract buyers, investors
Sources of IP:
• Internal R&D  filing patents
• Buying patents
• In-licensing (university,
government labs, etc)
IP portfolio building
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22. IP Best Practices: Early Phase
 Rely on patent analytics
 Guide future R&D >> white spaces
 Know your competition>> patent landscape (by family, industry)
 Identify external sources of IP
 Identify potential buyers
 Seek legal advice
 Patentability assessments, prior art searches, claim drafting
 Don’t do it (all) by yourself!
 Start early! AIA (First to File) kicks in 3/16/2013
 Don’t compromise key filing deadlines by lack of funding
 Use “roadmap” approach to filing
 Don’t forget your foreign filing
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23. IP Best Practices: Later Phase
 Keep Building Your Portfolio as a Strategic Business Asset
 Have a clear filing strategy, aligned with your corporate vision
 Monitor the industry for buying opportunities (companies, patents, technologies) or licensing opportunities
(universities, labs)
 Monitor your competitors
 Defensive Goals – Manage Litigation Exposure
 Don’t panic! Be Prepared…
 Assess your options, use litigation data - not only legal analysis (prob. of success, anticipated damages, etc)
 Mitigate the risk (patent defense funds) – be proactive!
 Offensive Goals – Enforcement & Monetization
 Be ready to enforce you IP
 Monetize your portfolio regularly
 Manage royalty, maintenance payments
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24. Is Cloud the Next Patent Battleground?
Attribute Characteristics Mobile Cloud?
Market Size Explosive Market, large economic stakes  ??
Products/ Multiple features in one product 
Services Multiple layers of Services in Platform 
IP Landscape Patent thicket – overlapping claims  ??
Business method patents – broad claims  ??
Competitive Incumbents with large IP holdings  
Dynamics Newcomers entering markets without IP  
NPE (trolls) patent holders  
WHAT DO YOU THINK?
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25. THANK YOU!
Efrat Kasznik
President, Foresight Valuation Group
ekasznik@foresightvaluation.com
650-561-3374
http://www.linkedin.com/in/ekasznik
Presentation available upon request