Ken Seddon, LOT Network: Protecting the Financial Services Industry from (Open Source) Patent Trolls. Companies spend over $29B each year on legal costs defending themselves against patent trolls. Over half of companies targeted by trolls make less than $10M in annual revenue — and companies engaging in software — like those involved in open source development — are the most likely to be sued. LOT Network CEO Ken Seddon will bring a panel of speakers from member companies such as SAP, Google, JP Morgan Chase and Dropbox to share strategies on how companies in the open source community can protect themselves from costly and frivolous litigation that drains funds away from innovation.

1. 1
Ken Seddon
CEO, LOT Network
November 8, 2017
Invest in Growth
How LOT Network Addresses the PAE Problem

2. Introduction of Ken Seddon
25 Years of Engineering and IP experience
LOT Network CEO
Ken Seddon
• BS. EE Georgia Tech, Master’s Device Physics from ASU, JD from ASU
• Motorola: engineer and patent prosecution
• Intel: Asst. Director of Patents - patent prosecution and licensing
• Numonyx: Chief IP Counsel
• Micron: Asst. General Counsel
• Apple: Strategic patent licensing, patent purchasing, NPE defense
• ARM: VP of IP
2

3. Why you should join LOT Network
$29 Billion
3

4. PAEs - hurting innovation
PAEs are responsible for 84%
of high-tech patent litigation
in the US!7
PAEs drain ~$80B from
the US economy per year,
or $1.5B a week10
1
PAE
84.1%
Operating
Companies
15.9%
Patent lawsuits have
jumped 500% between
2005-2014
Defendants added to NPE Campaigns Quarterly
AIA
New pleading
requirements
Dan McCurdy 2017 SAS NPE Forum and RPX Average
4

5. Where are the PAEs getting their patents?
Companies provide PAEs with the most of the patents
Operating
Company
81%
Inventor/
University
19%
81% of patents acquired
from PAEs come from
companies7
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6. LOT Agreement is scaling
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LOT Begins

7. LOT Agreement is scaling
7
LOT 2.0

8. LOT Agreement is scaling
8
LOT 2.0

9. LOT Agreement is scaling
9
LOT 2.0
Hyundai
Lenovo
Nissan
Honda
Cisco
Amazon
Alibaba
eBay
NetApp
Electronic Arts
Tesla
Volkswagen
Salesforce
Oracle

10. Who is joining and why?
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11. Some of LOT’s 178 members
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Software:
Hardware:

12. Some of LOT’s 178 members
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Automotive:
Financial Services

13. Some of LOT’s 178 members
13
Entertainment/media
Retail:
Key Others:

14. " Startups and small companies are
softest targets for trolls
− 50% of all companies sued by trolls
make less than $10 million/year
− Over 50% of all patent lawsuits
concern software patents†
What about small companies?
† GAO report on IP: http://www.gao.gov/products/GAO-13-465
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15. 1/3rd of LOT Members are start-ups
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16. What is LOT Network?
LOT - community providing PAE immunization
CommunityNon-Profit Protecting Innovation
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17. A license to the other members of LOT Network that
applies ONLY on and after transfer of the particular
patent to a patent assertion entity
(License on Transfer - LOT)
How LOT Protects Members
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18. No effect on traditional uses of patents
LOT - community providing PAE immunization
Free to
Cross License
Free to
Assert
Free to
Do Nothing
Free to
Sell
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19. No effect on traditional uses of patents
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20. No Burden to being a member
Don’t have to
give notice
Don’t have to
list patents
Don’t have to
report
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21. A patent holder, in combination with its affiliates,
that generates more than 50% of its
gross revenue from patent assertion.
What is an assertion entity?
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22. How LOT works
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23. Illustration of the LOT Agreement's Operation
Today: Companies 1 and 2
join the LOT Network.
Over 797,000 WW assets
Over 225,000 US assets
Future: LOT membership immune from
patent, regardless of the owner.
Legend:
= Transferred patent(s)
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Tomorrow: Company 2 sells a
patent to a Patent Assertion Entity.
License to LOT membership
automatically becomes effective.

24. Illustration of the LOT Agreement's Operation
Tomorrow: Company 1 sells a
patent to an Operating Company
Legend:
= Transferred patent(s)
Today: Companies 1 and 2
join the LOT Network.
Over 797,000 WW assets
Over 225,000 US assets
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OP CO
C
OP CO
D
OP CO
G
OP CO
H
OP CO
E OP CO
F
License to LOT membership
automatically becomes effective
when transferred to PAE.

25. Illustration of the LOT Agreement's Operation
Today: Companies 1 and 2
join the LOT Network.
Over 797,000 WW assets
Over 225,000 US assets
25
Tomorrow: Company 2 becomes an
assertion entity
License to LOT membership
automatically becomes effective.

26. LOT Network is non-profit: Annual Fee
LOT Member’s Annual Revenue Annual Membership Fee
Less than $5 million Free
Between $5 and $10 million $1,500
Between $10 and $25 million $2,500
Between $25 and $50 million $5,000
Between $50 and $100 million $10,000
Between $100 million and $1 billion $15,000
Greater than $1 billion $20,000 (cap)
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27. LOT provides value to its members
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28. Analysis of assets litigated by PAEs
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29. What types of patents did trolls use to sue in
the US in 2015? (3,608 litigations)#ofpatentassets
0
40
80
120
160
G06F H04L H04W G06Q H04M H04N G11C G11B B60R G06K
15161718
4646
72
83
150
155 G06F - Digital Data Processing
H04L - Transmission of Digital Information
H04W - Wireless Communication Networks
G06Q - Data processing
H04M - Telephonic Communication
H04N - Pictorial Communication
G11C - Optical elements
H04B - Transmission
G11B - Radio Receivers
B60R - Mirrors
G06K - Data Recognition
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30. #ofpatentassets
0
12,500
25,000
37,500
50,000
G06F H04L H04W G06Q H04M H04N G11C G11B B60R G06K
60676422
2221
397
40751
3962
5234
8908
11604
41208
1516171846467283150155
LOT has thousands of patents in the same
areas as those PAEs are asserting in the US
G06F - Digital Data Processing
H04L - Transmission of Digital Information
H04W - Wireless Communication Networks
G06Q - Data processing
H04M - Telephonic Communication
H04N - Pictorial Communication
G11C - Optical elements
H04B - Transmission
G11B - Radio Receivers
B60R - Mirrors
G06K - Data Recognition
LOT has over 506,000 assets
in the exact areas that
PAEs are asserting in the US.
(797,000+ Overall)
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31. Analysis of assets bought
31

32. 2015 Patent sales: Forecast of future litigation
#ofwwpatentassets
0
750
1,500
2,250
3,000
G06F H01L H04L G11C H04W H04N H01M H04M G06Q H04B G11B G03F G06K H03K H04Q
205210219221230264
465466491535
708
1657
2101
2244
2305
Data from:
Top 15 patent
categories for 16,634
assets sold in 2015
32

33. 2015 Patent sales: Forecast of future litigation
Data from:
#ofwwpatentassets
0
12,500
25,000
37,500
50,000
G06F H01L H04L G11C H04W H04N H01M H04M G06Q H04B G11B G03F G06K H03K H04Q
217378
6067
4346
22212405
5234
3962
263
40751
8908
397
11604
8632
41208
205210219221230264465466491535708
1657210122442305
LOT has over 566,000 assets
in the exact areas as the patents
bought in 2015
(797,000+ Overall)
Top 15 patent
categories for 16,634
assets sold in 2015
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34. Yeah, but does LOT REALLY work?
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35. LOT Members have divested assets, but…
No LOT Member has
ever been sued by an
asset that has left the
Network
• 35 of those assets have landed in the hands of 8
different PAEs
• One of those PAEs is Intellectual Ventures
Data from:
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36. Are you an Optimist?
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37. Are you an Optimist?
LOTimist?
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38. LOT Members are Optimists
The “LOT Member Index” = all publicly traded members of LOT
• includes those that have struggled recently (e.g. retailers)
LOT members have out performed the S&P 500® by 90% in last year
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39. Monetizers
The “Monetizers index” = Most active monetizers in recent years
• IBM, Philips, Yahoo, Qualcomm, Ericsson, Nokia, Technicolor, Sony, Tivo, Dolby
Monetizers lag S&P 500® by 87% in the last year
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40. Are you a LOTimist?
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43. " Oracle, FIS, Qualtrics, Target, TS Tech America, and Alcatel
Lucent Enterprise have already joined
" Facebook, Vanguard, Covestro, eHarmony, TD Ameritrade,
Bank of Canada, Bank of Montreal all expect to join by end of
next week
" These companies are joining now - to ensure they were
immunized to all 50k assets that are currently included in
Google’s membership in LOT
" There is a significant advantage to joining sooner rather than
later
Cause of recent growth spurt
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http://www.businessinsider.com/ap-google-forms-a-new-holding-company-alphabet-2015-8?IR=T

44. Backup
44

45. References
1. Patent Freedom
• https://www.patentfreedom.com/about-npes/litigations/
2. James Bessen & Michael Meurer, The Direct Costs from NPE Disputes, 99 Cornell L. Rev. 387 (2014).
3. RPX 2014 Litigation Report.
• http://www.rpxcorp.com/wp-content/uploads/sites/2/2015/03/RPX_Litigation-Report-2014_FNL_040615.pdf
4. US Patent and Trademark Office
• http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm
5. ROL Group
• http://www.richardsonoliver.com/news/2014/12/1/buyers-and-sellers-in-the-2014-brokered-patent-market
6. Linda Biel, AST
7. Dan McCurdy, RPX presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA.
8. Kevin Jakel, Unified Patents presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA.
9. Mark Lemely & Douglas Melamed, Missing the forest for the Trolls, Cornell Law Rev. 2013.
10. Robert Gebelhoff. (2015, November 23). ‘Patent trolls': Reading the comments. The Washington Post. Retrieved from https://
www.washingtonpost.com/news/in-theory/wp/2015/11/23/patent-trolls-reading-the-comments/ (© 2015)
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46. Significant Value in adding suppliers to
Membership
Significant value in
adding some
Suppliers
Both Suppliers and
Customers get
protection from patents
outside their bilateral
ecosystems
Company A Company B Company C
Suppliers Suppliers Suppliers
Value
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47. Why LOT is good for BUYERS
Help save
$29 billion
Can trust
suppliers
Stabilize
supply chain
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48. Why LOT is good for SUPPLIERS
Data from:
Reduce
indemnification
costs
Become
“preferred”
supplier
Gain access
to IP
Program
voluntary
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