1. IT’S NOT JUST ABOUT THE PATENT:
PATENT MARKET FACTORS
KENT RICHARDSON
GM THINKFIRE SILICON VALLEY
PATENT MONETIZATION CONFERENCE
LAW SEMINARS INTERNATIONAL
JANUARY 29, 2009

2. Copyright ThinkFire Services USA, Ltd. 2009
Two Sets of Market Factors
• Scenario
• I have a set of patents I want to sell/buy. I know what the
encumbrances are and where the legal problems are.
What market factors do I need to think about?
• Two sets of factors determine price
Patents’ Market: market for products using the patents
Patent Transactions Market: market for buying/selling patents

3. Copyright ThinkFire Services USA, Ltd. 2009
The Patents’ Market: Meet the “IMs” – TIM & SIM
• Product marketers use
• TAM: Total Available Market
• SAM: Serviceable Available Market
• Patent marketing on our own terms
• TIM: Total Impacted Market
• SIM: Serviceable Impacted Market
• Why new terms? Avoiding exec confusion

4. Copyright ThinkFire Services USA, Ltd. 2009
TIM: Total Impacted Market
• TIM = total annual revenue of all products worldwide
that use the patented technology
• How big can the pie be?
• Thoughts on TIM
• Derived from top down market analysis
• Helpful data sources iSupply, Dataquest…
• This is (hopefully) a big number
• Useful in first order valuation and relative rankings

5. Copyright ThinkFire Services USA, Ltd. 2009
SIM: Serviceable Impacted Market
• SIM = total annual revenue of all impacted products
where license revenue is available
• SIM is like SAM
• SAM – who will really buy the delivered product at the
specified price and terms
• SIM - who can the patent owner really license?
• SIM determines value for the specific buyer

6. Copyright ThinkFire Services USA, Ltd. 2009
SIM: Serviceable Impacted Market
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• Theory: SIM = TIM - Excluded Revenue
• Excluded revenue includes revenue from
• Existing licensees
• Low probability patent enforcement countries
• Companies with below threshold revenue
• No assertion possible for other reasons
• Practice: SIM = ACo Impacted Revenue + BCo
Impacted Revenue + …
• ACo… are revenues of actual licensable companies
• Bottoms up build of which companies use the patented technology
and where they derive revenues
• SIM can be ZERO

7. Copyright ThinkFire Services USA, Ltd. 2009
SIM: SIM Factors for a Patent Enforcement Buyer
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• Buyer’s product
• Buyer’s abilities: resources,
experience, commitment
• Patent strength
• Price and terms
• Total $ being sought
• Capture with flat fee, or cliff
with running royalties
• MFN’s
• Go to market
• How to enforce?
• Existing business relationships
• Supply chain point?
• Reasons to take license
• Specific product revenue impact
• Jurisdictions - overlap of
patents with prospective
licensee product
revenue/shipment
• Ability to pay license
• Finances
• Reasons to not take license
• Licensing history
• Licensing competition – royalty
stacking
• Industry licensing practices
Patent Buyer Factors Future Licensee Factors

8. Copyright ThinkFire Services USA, Ltd. 2009
Patent Transactions Market: Wow, What a Mess!!!!
How big?Who buys?
Who sells?
Why do companies transact?
Whatishappeningtoprices?
Quality – where are we?
How do we show quality?
Legal environment impact?
Financial debacle fallout?
What is the time to money?
New models?
What sells?New kinds of deals?

9. Copyright ThinkFire Services USA, Ltd. 2009
Patent Transactions Market: Survey Says…
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• 2009 Forecast
• $800M bare patents transactions – flat YOY
• IV continues to dominate & remains “Bold & Mysterious”
• “The Year of the Buyer”
• Deal flow spike since August
• 3.5x number of deals in the market compared with two
years ago – Intellectual Ventures
• Defensive buying cutting back
• Financial debacle impact
• Other solutions exist: IV, RPX, OIN, AST
• Patent litigation drop in Q408

10. Copyright ThinkFire Services USA, Ltd. 2009
Patent Transactions Market: Survey Says…
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• Some good news for sellers
• New buyers entering the market
• Direct line of sight to value – more of these buyers
• IV, RPX, OIN, AST
• Licensing companies
• “Specific solutions” patents are still hot - companies
defending against specific assertions
• See “Recession and Evolution: The Patent
Transactions Market at a Crossroads”, IAM Magazine,
March 2009

11. Copyright ThinkFire Services USA, Ltd. 2009
Conclusions
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• Patents’ Market
• Total Impacted Market and buyer specific Serviceable
Impacted Market (TIM & SIM) determine value
• Patent Transactions Market
• 2009 Year of the Buyer

12. Copyright ThinkFire Services USA, Ltd. 2009
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Silicon Valley Office
Kent Richardson
GM ThinkFire Silicon Valley
650 Castro Street, Unit 120-250
Mountain View, CA 94041
Phone 650.967.6555
Email: krichardson@thinkfire.com