American Bar Association

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American Bar Association Section of Intellectual
Property Law 2002 Summer IPL Conference i
pValue Partnering Opportunities
Pierre de Saint Phalle ipValue Management, Inc.
June 26-30, 2002 Philadelphia, Pennsylvani
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The founding partners of iFormation and ipValue

• World's largest PE firm focusing on IT
  investments
  
• Over 10b under management

• Premiere global investment bank
• Advisory and financial expertise
• 10bn under management in private equity

• Leading strategy consulting house
• Business development and operational expertise

• Independent vehicle focused on financing and
  building technology-enabled
  
• businesses in partnership with leading global
  corporations
  
• eONE Global in partnership with First Data Corp
• Site59, a partnership among travel companies, was
  sold to Travelocity

IP monetization vehicle - Deep implementation
expertise Partnering focus
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Common IP related issues for companies today

• Financial results
• Need to drop more money to the bottom line
• More efficient extraction of value from their
  organizational assets
  
• Linking RD to ROI
• Strategic
• Most companies want to be like IBM
• Protecting the source of technological and
  competitive advantage
  
• Effectively use intelligence to form alliances
  and improve licensing negotiations
  
• Shareholders are beginning to ask how companies
  are capitalizing on IP
  
• Knowledge
• Little awareness of the value of the IP portfolio
  
  
• Limited information systems in place to promote
  and coordinate effective IP management
  
• Sustainability of realization efforts may be
  thin
  
• Organizational
• Internal lack of coordination between IP owners
  warring tribes complex
  
• Lack of internal experience on realizing value
• Internal resources are limited

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Effectiveness of attitudes to IP
Examples
Hallmarks
IBM Lucent Canon Texas Instruments PG Dow M
otorola
Thomson Honeywell

• Invent new ways of fully utilizing IP

Visionary

• Manage portfolio for growth
• Align strategy of portfolio with that of the
  corporate

Integrated

• Understand opportunities within portfolio to
  license, assign, JV, spin out

Profit centre

• Consider what is core to the business and what
  should therefore be maintained
  
• Conduct royalty audits

Cost control / quick wins
Most of the Global 2000
Defensive uses

• Create legal defences, devise protection
  strategies
  
• Owned by General Counsel

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ipValue offers a comprehensive set of IP
monetization services
ipValue outsources the IP value extraction
functions from large corporations.
Innovation
IP Management
Value Extraction
Key Issues
Major Activities
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ipValue management team is best-in-class
Expert personnel with hands-on experience in IP
commercialization
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ipValues IP ecosystem
Unifying IP practices is the greatest opportunity

to fast track value creation
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Realization process overview
Phase 1 - Assessment
Phase 2 - Monetization

• Assess acquirers reasons for obtaining assets
• Approach selected acquirers
• Evaluate value pricing
• Develop business case and value proposition
• Provide information to interested parties
• Present to decision makers at acquiring entity
• Negotiation
• Closure
• Collection

Tech Transfer

• Establish focus
• Identify assets being monetized
• Evaluate strategy and define goals
• Evaluate assets for highest and best value
• Categorize assets into realization potential
  groupings
  
• Assess commercial viability
• Legal
• Technical
• Market
• Economic
• Assess potential acquirers/licensees
• Assess possible infringors

• Evaluate nature of alleged infringement or
  misappropriation
  
• Determine if infringer is a customer, supplier or
  non-related party
  
• Establish amount of use
• Evaluate extent of dependency
• Determine capacity to pay
• Prepare assertion support brief
• Approach selected alleged infringors
• Evaluate license pricing past and future
• Present to decision makers at alleged infringors
• Negotiation
• Possible litigation
• Closure
• Collection

Assertion
Legal Assessment
Downstream Assertion
Phase I The Assessment Process
Phase 2 The Monetization Process
Technical Assessment
Downstream Markets
Market Assessment
Upstream Licensing
Economic Assessment
Business Building
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Our value extraction model Tech transfer and
assertion

• Example ipValues strategic partnership with
  British Telecom
  
• ipValue and British Telecom entered into a
  partnership agreement in Dec. 2001 to
  commercialise BTs IP (both assertion and tech
  transfer)
• Six-year exclusive contract to license BTexact's
  existing and future patents to corporations
  headquartered in the United States and Canada
  
• Non-exclusive rights in Japan
• Entire 14,000 patent portfolio
• Long-term partnership, with an objective to
  generate 100m revenues per year towards the end
  of the contract
  
• Key terms of the partnership agreement
• Access to BTs patent portfolio information, BT
  technical and legal experts
  
• Joint decisions through the Patent Review Board
  (composed of ipValue and BT)
  
• Third party expenses funded by ipValue and
  reimbursed from revenue
  
• ipValue manages receipt of gross licence or
  royalty stream as an agent
  
• Sharing of revenues from portfolio exploitation
• BT to maintain currency of patent filings

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When does partnering make sense?

• Our partners share certain characteristics
• Large companies with world class research
  organisations
  
• A desire to generate significant revenues through
  licensing
  
• An understanding of the advantages of shared risk
  and reward
  
• A large portfolio of patents and other
  intellectual property which is under exploited
  
• The willingness to enter into long (five years or
  more) exclusive partnerships over significant
  portions of their portfolio
  
• How does that work in practice?
• ipValue manages the entire process assessment of
  the portfolio, identification, evaluation and
  generation of value realization opportunities
  
• We are designed to manage the whole or
  significant parts of a companys portfolio,
  rather than a limited number of identified
  patents
• Our partners maintain complete ownership and
  access to their intellectual assets
  
• Key decisions on the portfolio, including
  decision to license, have to be approved by the
  client
  
• Such an agreement allows our partners to weigh a
  potential revenue opportunity against any
  strategic or competitive concern
  
• We share the risks and rewards
• Revenue share model for management of realization
  process
  
• Investment-neutral process for our clients

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Outsourcing opportunities
Geography -Europe -Japan -North America
Extraction method - Assertion - Tech. transfer
- Bus. development
Opportunity
Technology/Field of use Range from one technology
group to entire portfolio
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Structure alternatives
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• Appendix
• eOne Global
• Site59

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eOne Global overview

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Site59 overview

• Founded in Spring 2000 to be a real-time provider
  of last minute travel packages over the internet
  by Boston Consulting Group and iFormation Group.
  Other investors included Starwood, Accor, Six
  Continents and other travel companies
• Site59 achieved tremendous success in the
  marketplace since launching its ASP strategy of
  providing packaging services to online travel
  distributors in March 2001
• Within 12 months became white label provider to
  Travelocity, Orbitz, Cheaptickets, Yahoo!Travel,
  Priceline, eBay, AA.com, Delta.com, Northwest,
  Lowest Fare, Bestfares, among others
• Revenue grew from 160K in March of 2001 to 4.4M
  in March 2002
  
• Company reached breakeven in March, ahead of
  budget and less than 2 years after launch
  
• In March of 2002, Travelocity purchased Site59
  for 43 Million
  
• SIte59 to become Travelocitys vacation packaging
  and merchant hotel business