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  • 1. . . . . . . . . . MICROSOFT WORKSHOP ON “STRATEGIC MANAGEMENT OF INTELLECTUAL PROPERTY (IP) ASSETS: HOW YOU CAN MONETIZE IP ASSETS” 23 JUNE 2006 PRE-WORKSHOP SESSION: INTELLECTUAL PROPERTY LAB 22 JUNE 2006 OVERVIEW The measure of competitiveness among enterprises will increasingly be driven by an enterprise’s ability to innovate, create and exploit new types of economic assets built from knowledge capital. Intellectual property (IP) which is a key by-product of innovation is a critical component of an enterprise’s knowledge capital. A key aspect of innovation management is the legal protection of ideas through IP rights management and legal enforcement. Enterprises with an exploitable portfolio of IP assets are better positioned for market dominance. In this shift towards the knowledge-based economy, enterprises with a strong portfolio of IP assets have a much greater chance of securing profitability. IP asset management is about designing a structured framework at the enterprise level to manage IP assets in a manner that enables the enterprise to extract commercial value of its IP assets particularly its IP rights. New strategies, tools and techniques have evolved to allow IP assets to be exploited optimally for revenue generation and to build shareholder value. This 1-day intensive program on “Strategic Management of Intellectual Property (IP) Assets: How You Can Monetize IP Assets” which is preceded by a 1-day IP Lab session, is part of Microsoft’s Strategic IP Initiative in the Asia-Pacific region. This Program provides an intensive management-oriented guide on key aspects of IP asset management, a key practice area that will increasingly impact the business performance of enterprises and nations. Aimed at industry players, this Program seeks to share insights on the following issues: • How IP assets can be leveraged as a tool for competitive advantage for enterprises and nations; • Identification of key economic, legal & business issues in the design, development and management of strategic IP policy at the both the corporate and national levels; and • Outline key legal & business risk management principles that organizations should adopt as part of their IP asset management policy 1
  • 2. . . . . . . . . . PRE-WORKSHOP CONSULTATION INTELLECTUAL PROPERTY LABS 22 JUNE 2006 PROGRAM The IP Lab is designed as a session in small groups of 3-5 to review the OBJECTIVES organization’s IP strategy in a business or transactional context focusing on how IP can be leveraged as a tool for competitive advantage. The facilitators will review the participants’ specific business model and corporate strategy needs with a view to helping the participants structure their business transactions in a manner that will fully exploit IP. Issues covered will typically include: • Understanding the types of IP an organization has • How the organization can structure deals with IP as a value driver • IP commercialization strategies and tactics suited for the organization • Licensing terms and conditions • Integration with overall business strategies • Development of a customized strategic IP plans for the organization FACILITATO Zaid Hamzah RS Director for Intellectual Property, Legal & Corporate Affairs Microsoft Asia Pacific David Len Partner Abdul Raman Saad & Associates (“ARSA”) Kuala Lumpur Malaysia Teddy Kalaw Partner Kalaw SY Vida Selva & Campos Manila Philippines TARGET • Business executives, software developers & industry players involved in the AUDIENCE creation, management and protection of IP • Government officials and policy makers responsible for the creation, management and exploitation of IP assets (copyrights, patents, etc) in IT, biotechnology and other high technology industry) • Researchers & academics involved in research projects 2
  • 3. . . . . . . . . . “ STRATEGIC MANAGEMENT OF INTELLECTUAL PROPERTY ASSETS: HOW YOU CAN MONETIZE IP ASSETS ” 23 JUNE 2006 PROGRAM Intellectual property is a key value driver that can enhance an enterprise’s OBJECTIVE competitiveness. This Program seeks to provide a practical guide on how to develop IP asset management strategies for greater value extraction. S Specific objectives of this Program are: 1 To equip participants with the knowledge and skills to: • Understand the IP eco-system • How to carry out IP audits • How to develop an IP management strategy • How to commercialize IP assets including the development of strategies and techniques for IP commercialization 2 Learn from industry best practices on IP value creation TRAINERS Zaid Hamzah Director for Intellectual Property, Legal & Corporate Affairs Microsoft Asia Pacific David Len Partner Abdul Raman Saad & Associates (“ARSA”) Kuala Lumpur Malaysia Teddy Kalaw Partner Kalaw SY Vida Selva & Campos Manila Philippines TARGET • Business executives, software developers & industry players involved in the AUDIENCE creation, management and protection of IP • Government officials and policy makers responsible for the creation, management and exploitation of IP assets (copyrights, patents, etc) in IT, biotechnology and other high technology industry) • Researchers & academics involved in research projects 3
  • 4. . . . . . . . . . PROGRAM 8.30 am Registration 9.00 am Chairperson’s opening address 9.15 am Strategies for Intellectual Capital Creation, Management and Exploitation • Nature of the IP eco-system – understanding the linkage between IP and innovation • Challenges for industry and governments in the Knowledge Economy • Emergence of IP industry as a strategic sector - IP as a value driver • How IP promote competitiveness - leveraging intellectual capital (focus on Intellectual Property) for competitive advantage & corporate growth • Strategies & tactics for intellectual capital building, management & commercialization • Understanding policies related to IP and the legal framework • IP as one key business driver - IP strategy and the overall corporate strategy 10.00 am IP Fundamentals • Copyright, Trade Mark, Patent, Trade Secrets • How to protect your IP & develop the most appropriate protection strategies for your organization • How to ensure you don’t violate the IP of others • Litigation issues in IP – managing risks proactively • How to protect your IP in government –commissioned work • International aspects of IP management • Understanding international IP treaties 10.45 am Morning Refreshment 11.00 am Understanding Software & Business Method Patents • What are software and business method patents • Why is software patent so controversial • How to develop a software patent strategy – offensive, defensive mode • International aspects of software patenting • Case studies: Amazon 1-click system • Understand software patent processes • Walk through of US software patents (Amazon 1-click system, Microsoft Patent Number 6,999,083 (spectator experience for networked gaming) 4
  • 5. . . . . . . . . 11.30 am . Auditing IP Assets & IP Due Diligence • Why IP audit needs to be conducted • How to conduct an IP Audit • Legal, business and technology issues in IP audits • Maintaining an IP Portfolio in your organization • IP due diligence in mergers and acquisitions 12.00 pm IP Valuation & Financing • How to value your IP assets • 3 approaches: cost, income, market) • IP Collateralization, securitization and capitalization: Business and legal challenges • Role of financial institutions in IP commercialization • How start up can raise money using IP 12.30 pm Legal Issues & Documentation in IP-related Transactions • Structuring deals and documentation structure • Understanding the legal process in IP-driven transactions • IP Indemnity issues • Types of legal documentation in IP-related transactions • Walk-through IP clauses in basic legal documents such as licensing agreement, assignment agreement, registered user agreement, software development agreement, web-hosting agreement, linking agreement, end-user agreement, turnkey agreement 1 pm – 2 pm Lunch 2.00 pm Intellectual Asset Management as part of Corporate Strategy • IP strategy as part of corporate strategy • How to develop a corporate IP policies • IP and brand value creation • Business and legal framework for IP commercialization • Patent strategy as one key element in the overall IP strategy • Offensive versus defensive IP strategies • Understanding digital rights management 2.30 pm Developing Strategic Approaches for Intellectual Property Exploitation • Leveraging intellectual capital (focus on Intellectual Property) for competitive advantage – business models and IP-driven revenue generation • Strategies & tactics for IP commercialization • Understanding IP revenue generation models: packaged software fee, software development fee, ASP subscription fee 5
  • 6. . . . . . . . . . • • Developing a digital asset management programs at the corporate levels Business and legal framework for IP commercialization • IP commercialization strategies and its integration with overall corporate 3.15 pm Structuring Issues and Channel Management in IP Commercialization • Understanding deal and document structure in IP-driven transactions • Role of financial institutions in IP commercialization • What VCs and other funders look out for in IP-driven transactions • How to manage your channel partners locally and overseas • Managing cross-border issues in IP commercialization • Case studies in IT and biotechnology 4.00 pm Afternoon Refreshment 4.15 pm I Strategies and Techniques for IP Commercialization • IP valuation & its business and legal challenges • How to develop an IP commercialization strategy • Techniques for IP Commercialization: Licensing, assignment • Business and legal challenges in IP commercialization • Managing the legal process and documentation • Case studies II Practical Steps in IP Commercialization Walk through of issues listed in the Manual at Annex A How IP fits into the overall business planning (See checklist at Annex B) 5 pm-6 pm Breakout Tracks for IP Labs (small groups’ review) Track 1 IP Lab on “How to Develop IP Strategy” Facilitator: Zaid Hamzah  Tips for developing strategic IP plans  Auditing of IP assets and managing IP portfolio  Integrating IP strategy with overall business strategy  Developing patent strategies  Mapping R&D to market demands  Managing legal risk issues in documentation Track 2 IP Lab on “Strategies and Techniques for IP Commercialisation” Facilitator: David Len  How your organization can develop an IP commercialization strategy  IP and product commercialization strategies for your organization  Ownership issues and accountabilities  IP & revenue generation 6
  • 7. . . . . . . . . .   Risk assessment and mitigation plans Metrics to measure performance of commercialization program Track 3 IP Lab on “Implementing IP Strategies in the Local Market” Facilitator: Teddy Kalaw  IP protection in the local market  Branding strategy for your IP/products  IP development and productization & portfolio management  Marketing and sales issue & other operational aspects  Managing your distribution channel in the local market  Legal issues and documentation in your distribution channel in the local market 7
  • 8. . . . . . . . . . Annex A IP COMMERCIALIZATION CHECKLIST OF ISSUES Developing the Strategic Plan • Overview of IP commercialization program • Broad strategy & action plan • IP commercialization & economic development action plan • Vehicle to execute program Intellectual Property Review • Conduct of IP audit • Creation of IP portfolio • IP valuation • Ownership issues & accountability plans IP commercialization strategy • Development of IP commercialisation strategy • Identification of suitable markets Product or service description • Market research & comparison • Proprietary rights • Identification of market leaders • Identification of niche areas Product commercialization strategy • Development of product commercialisation strategy • Matching product with identified market Development Plans • Review current status • Development plans • Development timetable • Development risks 8
  • 9. . . . . . . . . Operations . • Overview of operations • Scope of operations • Ongoing operations Financial strategy & plans • Financial assumptions • Financial forecasts • Quantification of all capital requirements • Financial risks • Exit strategies Acquiring funding and financing • Acquiring funding and financing • Valuation of business • Methods of acquiring funding and financing • Conventional loan / conventional collaterals • Issues in IP funding and financing Licensing Structure • Licensing Structure • Assignment of IP • Acquisition of IP Determination Of Fees • Royalties • Licensing Fees Commercialization Structure • Joint venture • Partnership • Affiliate • Brokerage • Infomediary • Advertising Documentation Structure Key elements of documentation Negotiation of Agreements: (i) License (ii) Assignment (iii) Distribution (iv) Franchise (v) Material Transfer (vi) Consultancy (vii) Manufacturing (viii) Outsourcing 9
  • 10. . . . . . . . . . Marketing and sales • Market analysis • Marketing strategy • Sales strategy • Pricing of products Management • Company organization • Management team • Board of directors • Management compensation Competition • Competition in national market • Competition in international market • Forms of anti-competitive commercialisation Performance reviews / post-mortem • Review of IP portfolio • Review of market acceptance • Conducting ongoing trials Group Review and Strategic Planning Review Strategic Planning templates Group Presentation • Strategic Plans for IP Commercialization • Operational Programs • Execution Roadmap 10
  • 11. . . . . . . . . . ANNEX B BUSINESS PLANNING CHECKLIST This checklist is designed to help aid budding entrepreneurs develop a business plan ____________________________________________________________________ A. DESCRIPTION OF THE BUSINESS CONCEPT 1. What is the business concept and the opportunity? Any proof of concept in the marketplace? 2. What problem will the product or service solve? 3. What are the primary benefits to the customers or clients? 4. Does the concept create substantial customer value? 5. Does the concept reduce/eliminate substantial cost? 6. Does the concept reduce complexity? 7. Does the concept deliver convenience? 8. What are the cost savings? 9. Any productivity gains? 10. How does the product/service improve on or replace current offerings if any? 11. What is the business model? Is the business model viable? 12. What business activity will the venture undertake? 13. Why now? 14. What is unique about this venture? 15. Is there a working model or prototype? 16. Is the business model economically justifiable? 17. What stage of development is the venture in? How long has the venture been running? 18. What companies does the business resemble? How have they fare in their markets? Any basis to compare? B. TARGET MARKET 1. What is the target market? Who are the customers? If there are early adopters, who are they? 2. What is the size and value of the target market? What has been the growth rate for this industry space? 3. Describe market segmentation, if any 4. What is the “psycho-graphics” of the market – ready for the product and services? 5. What is likely to be adoption rate of the venture’s technologies, products and services? 6. Does the venture have a marketing target list? 7. Any present market share? 8. What is the roll-out strategy of its products and services? C. PATH TO PROFITABILITY 1. What are the revenue streams? 2. How long will it take from the current stage of development to bring this to market? 3. What is the average time to market the product and services - from initial pre-sales to deployment? 4. What are the specific plans of action to achieve profitability? Time frame? 5. What level of profits is expected? 6. How will the first sale happen? Who will be the first customer(s)? 7. What is the proof that can/has been offered that the target customers value the venture’s product or service? 11
  • 12. . . . . . . . . D. . MARKET POTENTIAL 1. Is there a large market opportunity? What is the global potential? 2. What is the expected growth of the target market? What is the future potential? 3. What are the economics of the market? What is the potential to expand? 4. What will the pricing position be relative to the industry? 5. Is the venture focused on its target market? 6. Is the venture familiar with and interested in the given market space? 7. Are there any legal, structural or cultural issues or impediments that might affect the delivery of the product and services? 8. What is the venture’s growth plan? 9. Can the business “scale up”? Is the business capable of going for “volumes” particularly on a global basis? Any limitations on scaling up? 10. Timing? E. OVERALL OPPORTUNITY 1. Is the business opportunity both highly attractive and clearly realistic? 2. What are the risks and rewards in this venture? 3. What comparisons are there to past success stories that indicate this venture will succeed? 4. Has the venture gone out to the market already to test its ideas? What is the proof of demand? F. ASSESSMENT OF COMPETITIVE ADVANTAGE 1. What special knowledge or technology does the venture possess and how will this knowledge be protected? 2. Is the business defensible from competitors? Price-wise? Strategy? 3. Who are the competitors? 4. Number? 5. Where do they operate? 6. What stage of development are they at? 7. What is their market share? 8. What strategic advantage do they have relative to this venture? 9. How distinctive/ different is the idea? 10. What factors could cause this venture to stop/ reconsider the idea? 11. Can this venture be a market leader? 12. Is this business going to be around and a real world winner in 5 years? G. DESCRIPTION OF BUSINESS STRATEGY 1. What is the business strategy for the venture? 2. What does the venture need to do very well in order to win in this market? 3. What is the venture’s growth strategy? Can the venture cope with sudden surges? How scalable is their business? 4. Any vulnerability factors? 5. Any plans for overseas expansion? In what form? When? H. 12
  • 13. . . . . . . . . . IMPLEMENTATION PLAN 1. Does the venture understand and have they addressed the implementation strategy? 2. How is the business model going to be implemented? 3. Does the venture have customer marketing, sales and support team? 4. What is the venture’s marketing plans? Any impediments? 5. Has the venture addressed the service and support issue? 6. Have the venture identified all the resources needed? 7. What are the company’s employment plans? I. PROJECT FINANCIALS 1. What are the business projections? 2. Are the financial projections sound? Do the market and financial projections demonstrate that the venture understands its business? 3. What is the “unit cost” for the revenue generated? 4. How long is the sales cycle? Does it vary with type of clientele? 5. Able to cope with sudden surges in demand? Is the business “scalable”? 6. Do they have the following :  Quarterly financial projections for two years and annual projections up to Year 5, including Pro Forma cash flow and budget analysis;  Breakeven analysis. J. MANAGEMENT TEAM BEHIND VENTURE 1. Management Team  Who are the directors & members of the advisory committee?  Indicate their industry/startup experience  Details of those running the business  Previous entrepreneurial experience  Previous work experience  Qualifications  Any advisors who add strategic value?  How many employees?  Recruitment plans? 2. Is the team of sufficient breadth, balance and quality to make its ideas happen? Are there high quality team members involved? 3. Are the team members dedicated to the venture and their roles in the group? 4. Does the venture have the necessary communications skills to present a compelling proposition to its partners and targeted market? 5. Does the venture have a clear plan for spending the investment money it receives? K. 13
  • 14. . . . . . . . . . STRATEGIC BUSINESS PARTNERS 1. Does the venture have the right partners to fill capability / asset gaps? 2. What relationships lie in place to help drive this business forward? 3. Are the strategic partners dedicated to the venture and their roles in the group? 4. Can the company add synergistic value to the investor’s group of companies? L. FINANCING PARTNERS 1. Information on existing financial partners if any 2. How will these partners help the business in future? 3. Does the venture already have funding that adds strategic value? 4. Any IPO experience? M. OTHER ISSUES OF INTEREST TO INVESTORS 1. What is the investment to date? 2. How much funding is required? 3. How will this funding be used? 4. What is the timing/phasing of expected growth in relation to the timing for further investment? 5. What is the amount of up-front capital investment required if any? 6. What is the expected time and amount of pay-off to investors? 14