Leveraging Cross Licensing  Agreements as a Defensive Patent  Strategy in the Current IP Landscape  IP Law Summit  March 2...
The IP Market Place Today Number of patents estimated to be in a smart phone:                         250,000 Source: RPX ...
Introduction to the IP Landscape for     STMicroelectronics (“ST”)     STMi      l t     i
Over 20,000Issued & PendingPatents Worldwide
The Value ChainChip Suppliers   Consumer Products   Retailers
Who Attacks Chip Suppliers?               For sometimesifaour customer                    example,      Chip suppliers may...
How has the IP Market Evolved?
How Has the IP Market Evolved?• Patent Aggregators – Defensive Origins         • Concept:             • Third party purcha...
How Has the IP Market Evolved?• Middle Man - Monetization         • Concept:             • Company sells NPE patents outri...
How Has the IP Market Evolved?• Everyone Seems to be Selling Patents (example deals over past 2 years)    • To Other Compa...
Patent Cross-Licensing      As Shield      A a Shi ld
The Cross-Licensing Shield• What is Patent Cross Licensing    • Reciprocal agreement between two companies to license each...
The Cross-Licensing Shield• Benefits of Cross-Licensing    • “Direct to Source” licensing          • Does not matter if pa...
Cross-Licensing – Considerations• Consideration 1: Entrapment    • Term Agreements – False Sense of Security         • A f...
Cross-Licensing – Considerations• Consideration 2: Exclusive Relationships    • What if a party with a cross-licensing pro...
Cross-Licensing – Considerations• Consideration 3: Patent Exhaustion    • Licensing a product may result in licensing its ...
Cross-Licensing – Considerations• Consideration 4: Change of Control – Don’t forget all three:         • Merger/Acquisitio...
Cross-Licensing – Considerations• Consideration 5: Balancing Interests    • Cross-Licensing has significant benefits in to...
Thank You!      © Copyright, STMicroelectronics, 2013
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Leveraging Cross-Licensing Agreements as a Defensive Patent Strategy in the Current IP Landscape - Presentation: Nainesh Shah, STMicroelectronics, Inc. - IP Law Summit

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For more information: emailus@marcusevans.com

Nainesh Shah frp, STMicroelectronics, Inc. and a speaker at the marcus evans IP Law Summit Spring 2013, delivered his presentation titled "Leveraging Cross-Licensing Agreements as a Defensive Patent Strategy in the Current IP Landscape."

Join the 2015 Summit along with top IP Law executives and service providers in an intimate environment for a focused discussion of key new drivers shaping the legal industry today.

For more information: emailus@marcusevans.com

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Leveraging Cross-Licensing Agreements as a Defensive Patent Strategy in the Current IP Landscape - Presentation: Nainesh Shah, STMicroelectronics, Inc. - IP Law Summit

  1. 1. Leveraging Cross Licensing Agreements as a Defensive Patent Strategy in the Current IP Landscape IP Law Summit March 23, 2013 Colorado Springs, CO By: Nainesh ShahThe views presented herein are for discussion purposes only and do notnecessarily represent the views of STMicroelectronics y p
  2. 2. The IP Market Place Today Number of patents estimated to be in a smart phone: 250,000 Source: RPX Number of US patents issued in 2012: 253,155 Source: IFI CLAIMS Announces Top 50 U.S. Patent Assignees of 2012Amount California jury originally awarded Apple 1,050,000,000in case against Samsung:Note: Later reduced by ~45%Estimated number of full time patent attorneys itwould take to compare all software patents issued 2,000,000in a give year with all software products (with only10 min review):Source: Scaling the Patent System: By: Christina Mulligan & Timothy B. LeeNumber of actively registered practitioners 41,800identified by the USPTO:Source: patentlyo (January 13, 2012)
  3. 3. Introduction to the IP Landscape for STMicroelectronics (“ST”) STMi l t i
  4. 4. Over 20,000Issued & PendingPatents Worldwide
  5. 5. The Value ChainChip Suppliers Consumer Products Retailers
  6. 6. Who Attacks Chip Suppliers? For sometimesifaour customer example, Chip suppliers may attackrequest attacks Sometimes a competitorindirect claims p AndDirect tattackkby aan NPE customeris attacked, chipmay receive a by competitor an NPE other we inDi also receive for indemnification suppliers tt Direct “indirectly” through b attacks areas where they compete Other Chip Suppliers (direct competitor) (di i ) Patent Request sale w/ Patent Sale retained For Indemnification interest Customer Non-Practicing Entities Chip Suppliers Sometimes Consumer Products Makers (our customers)
  7. 7. How has the IP Market Evolved?
  8. 8. How Has the IP Market Evolved?• Patent Aggregators – Defensive Origins • Concept: • Third party purchases patents (or rights in patents) to license to its member companies • Benefit: • Provides way to share costs to take a license. Sometimes provides added benefit to be able to use patents defensively • Drawbacks: • Membership fees • Do not have full control over what patents are acquired • Example Patent Aggregators • Intellectual Ventures, RPX, Allied Signal Trust (“AST”)
  9. 9. How Has the IP Market Evolved?• Middle Man - Monetization • Concept: • Company sells NPE patents outright, and/or • Company partners with NPE to allow them to license patents, while retaining some interest • Benefit: • Provides immediate cash and/or on-going royalty possibility • Less likely to draw a counter-attack • NPE may agree not to attack Company in other areas • Drawbacks: • Same NPE’s may be already attacking Company in other areas • Loss of rights to independently license patents
  10. 10. How Has the IP Market Evolved?• Everyone Seems to be Selling Patents (example deals over past 2 years) • To Other Companies: • Microsoft acquires AOL patents for $960M • Google purchases Motorola Mobility for $12.5B • To NPE’s • Acacia acquires Adaptix patents for $160M • Wi-LAN acquires Alvarion patents for $19M • To Patent Aggregators • RPX & IV acquire Kodak patents for $ $525M • AST acquires MIPS patents for $350M • To Consortiums • Rockstar (Microsoft/Apple/RIM/Sony/Ericsson) acquires Nortel patents for $4.5B
  11. 11. Patent Cross-Licensing As Shield A a Shi ld
  12. 12. The Cross-Licensing Shield• What is Patent Cross Licensing • Reciprocal agreement between two companies to license each other patents within an defined scope • Five Key Terms: • Licensed Patents • All patents or sub-set • Capture period (e.g., includes patents filed before end of Term) • Licensed Products • Full business, or some exclusions (e.g., exclude memory chips) • Field of Use • Is there a limitation on which applications the products can be used in (e.g., only for automotive applications) • Term • Life of Patents vs. Term (guillotine) • Consideration • Fixed fee balancing payment, royalty bearing or royalty free
  13. 13. The Cross-Licensing Shield• Benefits of Cross-Licensing • “Direct to Source” licensing • Does not matter if patent is subsequently sold • NPE’s/third parties cannot assert patent against you later • Leverage to obtain favorable terms may be better at source • Risk of counter-attack by both parties higher • Full control over who gets licensed and under what terms • Define scope to meet business objectives • Only license companies who you want
  14. 14. Cross-Licensing – Considerations• Consideration 1: Entrapment • Term Agreements – False Sense of Security • A fixed Term Agreement, by definition, means that a party will become unlicensed to patents after a set time (e.g., 5 or 10 years) • If new products are introduced during the Term which use the licensed patents, other party will have additional leverage at time of renewal • Solution – Consider “Life of Patents” agreement
  15. 15. Cross-Licensing – Considerations• Consideration 2: Exclusive Relationships • What if a party with a cross-licensing program wants to enter into an “exclusive” license arrangement for a new joint venture • Solutions • “Know How” can be exclusively licensed separate from patents • Cross-license agreements can be drafted to exclude “jointly owned” patents and/or patents which cannot be freely licensed • Split Ownership – Each party independently owns certain patents in a particular area even if jointly created • Under AIA – Inventions from Joint Research considered “commonly owned” if agreement in place prior to filing date and application disclose names of parties. Avoids double patenting.
  16. 16. Cross-Licensing – Considerations• Consideration 3: Patent Exhaustion • Licensing a product may result in licensing its use in combinations • Quanta – Exhaustion applies if: • Product substantially embodies the patent, and • There is an authorized sale, and • The product sold is “capable of use” only in practicing the invention • TransCore – Non-assert is the same as license • Intent does NOT matter • Solutions • Get full value up front • Agree to first exhaust all remedies against down stream users
  17. 17. Cross-Licensing – Considerations• Consideration 4: Change of Control – Don’t forget all three: • Merger/Acquisition of Full Business • License typically extends to new entity • No license to pre-existing products of acquiring company • Acquisition of Another Business – Options • Automatically licensed provided reciprocal license • Only licensed if under certain size (revenue) • No license – parties agree to discuss extension in good faith • Divested Company • License typically extends to divested company • No license to pre-existing products of acquiring company
  18. 18. Cross-Licensing – Considerations• Consideration 5: Balancing Interests • Cross-Licensing has significant benefits in today’s world, but interests must be balanced • What to Keep In Mind: • Over cross-licensing will deflate value of patents • Consider potential consequences of competitor copying your products – especially in “life of patents” agreements • Consider if certain areas should be off limits for a cross-license • Tailor cross-licensing to your specific needs/industry • Do you allow for “have made” rights • Do you license “standard essential” patents • Does license automatically terminate if company is acquired by certain third parties • Are patents acquired by either party during the term included
  19. 19. Thank You! © Copyright, STMicroelectronics, 2013

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