Buying & Selling IP (Series: Intellectual Property Boot Camp)

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Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
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DISCLAIMER
The material in this webinar is for informational purposes only. It should not be
considered legal, financial or other professional advice. You should consult with an
attorney or other appropriate professional to determine what may be best for your
individual needs. While Financial Poise™ takes reasonable steps to ensure the information
it publishes is accurate, Financial Poise™ makes no guaranty in this regard.
About this PowerPoint: if you are looking at this PowerPoint without the benefit of
listening to the conversation that surrounded it then you are doing yourself a disservice.
This PowerPoint was prepared in contemplation of being viewed in conjunction with
listening to a one hour webinar on the topic
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MEET THE FACULTY
Moderator:
Cristina Nolan – Financial Poise
Panelists:
Ada C. Nielsen – The Peregrine Maven Group
Sanjay Prasad – Prasad IP, PC
Eugene Goryunov – Kirkland & Ellis, LLP
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ABOUT THIS WEBINAR:
Buying & Selling IP
IP rights are an important class of intangible assets that can be assigned or licensed
to generate revenue. Indeed, some companies do not make or sell products; their
entire revenue is derived from the licensing of their patents. Suffice it to say,
licensing revenue has become a significant source of value in the global intellectual
property economy. This webinar will help you better understand the complex legal
issues associated with IP transactions.
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ABOUT THIS SERIES:
Intellectual Property Boot Camp
Intellectual property (IP) rights constitute an important asset class. Indeed, the
“information economy” and high tech have made this asset class go from one that few
understood and even fewer invested in to one watched and invested in by millions..
IP includes patents, trademarks, copyrights, and trade secrets. How do you create rights in
one of these assets? How do you protect those rights? How do you transfer them (or have
them transferred to you)? How do the interact with each other?
This information-packed webinar series focuses on the intricacies of IP rights as they relate
to the specific areas of brand protection, IP transactions, internet marketing, and other IP
issues that are critical when representing innovators and inventors.
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EPISODES IN THIS SERIES
2/7/19 Episode #1:
Introduction to Key Concepts
3/7/19 Episode #2:
Choosing, Building & Protecting Your Brand
4/4/19 Episode #3:
Buying & Selling IP
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Dates shown are premiere dates.
All webinars will be available
On Demand approximately 4 weeks
after they premiere.

Episode #3:
Buying & Selling IP
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INTELLECTUAL PROPERTY TRANSACTIONS
• Historically speaking, the market for buying and selling IP has experienced significant
growth. Today, businesses treat IP like any other fixed asset.
• A business may acquire IP for the following reasons:
 Strengthen negotiation positions
 Risk mitigation
 Investment opportunities
 Increase market presence
• A business may divest its IP for the following reasons:
 Monetize latent IP
 Monetize excess IP
 Quickly raise capital
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HOW TO BUY AND SELL INTELLECTUAL
PROPERTY
• IP Brokerage
 IP brokerage firms work with clients interested in acquiring IP as well as
clients looking to divest IP.
 On the sell-side, brokerage firms will often perform due diligence of the
assets to determine an initial sales price.
• Auctions
 Similar to any other auction, interested parties may bid on IP assets, with
the highest bidder acquiring the assets.
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CHALLENGES IN IP TECHNOLOGY
• Intellectual property can quickly depreciate or disappear.
• This risk of depreciation/loss exists for a number of reasons, including:
 changes in technology;
 changes in law;
 unfamiliarity of the acquiring party with the acquired assets; and
 loss of inventive talent and knowledge either before or after the transaction.
 Bare patents in a new area can be challenging to sell.
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PATENTS
• PATENTS protect inventions and discovery, including new and useful processes,
machines, products, compositions, or manufactures.
• A patent is a right granted by the U.S. government to an inventor for a limited time
to exclude others from:
 Making, using, offering to sell, or selling the patented invention; or
 Importing the patented invention into the United States.
• Types of patents include design, utility, and plant patents. Generally, a patent lasts
twenty (20) years from the date of filing.
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ACQUIRING PATENTS
 When acquiring patents, the following issues should be considered:
• Ownership
 Confirm that the seller does in fact own the patent.
 Verify that all required maintenance fees have been paid.
 Identify the countries the patent rights exist.
• Pending Applications
 Determine whether the patent has any continuations or continuations-in-part
that are pending before the Patent Office.
 “Open chains” are often more valuable because the buyer may prosecute new
applications based on the acquired patent.
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ACQUIRING PATENTS (cont’d)
• Validity and Enforceability
 Determine whether any actions have been filed on behalf of or against the
seller for infringement.
 Perform an independent validity and prior art search.
• Licenses and Assignments
 Verify that any prior assignments have been properly recorded.
 Determine the scope of use for any existing licenses.
 Determine the value imputed to the IP by the licenses.
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PATENT VALUATION
 When accessing the monetary value of a patent, one must consider the following
factors:
• Technology Area
 The earlier in the commercialization stage the technology, the lower the
value of the patent…unless it is a “foundation” patent.
• Priority Date
 An early priority date means less prior art can be brought against the
patent.
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PATENT VALUATION (cont’d)
• Strength and Breadth of the Claims
 A majority of the due diligence should be spent analyzing the patent itself.
 The claims of a patent determine the scope of coverage, and thus,
stronger claims provide wider coverage.
 Important to analyze the claims in light of the specification.
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PATENT VALUATION (cont’d)
• Market Need and Size of the Relevant Technology Market
 Valuable patents relate to a large technology market and solve an wide
spread problem within that market.
• Other Factors
 Years remaining on the term of the patent.
 Size of the portfolio.
 Whether or not the patent family is an “open chain.”
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CHANGES IN PATENT LAW
• The 2014 Supreme Court decision in Alice Corp. v. CLS Bank had a dramatic
effect on the validity of software and business-method patents.
• The problem is that the so-called judicial exceptions to patent eligibility are
not adequately defined and lead to unpredictability.
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CHANGES IN PATENT LAW (cont’d)
• The American Intellectual Property Law Association (AIPLA) has become the
latest IP group (after IPO) to release proposed legislation to clarify the
standard and complaining that the resulting uncertainty has weakened the
patent system.
• The AIPLA proposes that an invention be ineligible “only if the claimed
invention as a whole exists in nature independent of and prior to any human
activity, or can be performed solely in the human mind."
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AMERICA INVENTS ACT
• Growing concern regarding "excessive invalidations" by the Patent Trial and
Appeal Board. Possible solutions to consider:
 Evidentiary standard should be clear and convincing evidence (not merely
a "preponderance of the evidence.”)
 claim terms their plain and ordinary meaning, rather than the "broadest
reasonable interpretation"
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AMERICA INVENTS ACT (cont’d)
 Different panels of judges for institution and trial
 Grant amendments more liberally
 Stricter provisions on standing and estoppel
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TRADEMARKS
• A TRADEMARK identifies the source of a good (or service) used in
commerce.
 Names, brands, words, or phrases (e.g., APPLE®, Apple’s iPod, or
McDonald’s slogan “I’m Lovin’ It”)
 Symbols or shapes (e.g., Nike’s Swoosh or GEICO’s Gecko)
 Trade-dress or product, package, or store design (e.g., 7-Eleven store
design)
 Sounds, scents, or textures (e.g., NBC chimes)
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TRADEMARK DUE DILIGENCE
 When acquiring trademarks and/or service marks, the following issues
should be considered:
• Ownership
Confirm that the seller does in fact own the mark.
Identify any licenses, assignments, security interests, or any other
burden attached to the mark.
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TRADEMARK DUE DILIGENCE (cont’d)
• Registration
Determine whether the marks have been registered federally and/or in
one or more states.
If the mark(s) have been registered, confirm that the registration(s) have
been properly maintained.
• Use of the Mark
Verify that the mark(s) are still in use… and have been used properly.
Non-use for certain time period may constitute abandonment, and
consequently, loss of the mark.
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TRADEMARK DUE DILIGENCE (cont’d)
• License and Assignments
Perform detailed due diligence on all licenses and assignments.
Licenses may significantly affect the nature, scope, and/or duration
of the buyer’s activities.
Ensure that the seller has not engaged in “naked licensing,” which
may lead to the mark(s) being declared abandoned and
unenforceable.
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COPYRIGHTS
• A COPYRIGHT protects:
 original works of authorship
 fixed in a tangible medium.
• For example, copyright protects literary, musical, and dramatic works.
• A copyright protects the expression of ideas, not the underlying ideas of the work. For
example, an idea of a song is not protectable, but the written sheet music is protectable.
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“BUNDLE OF STICKS”
• A copyright gives its owner the exclusive right to:
 Reproduce the work – others cannot reproduce the work without permission.
 Prepare derivative works – others cannot create adaptations without
permission.
 Distribute copies of the work – others cannot distribute copies without
permission.
 Perform works – others cannot publicly perform certain works.
 Display works – others cannot publicly display certain works.
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COPYRIGHT DUE DILIGENCE
 When acquiring copyrights, the following issues should be considered:
• Ownership
Confirm that the seller does in fact own the rights in the copyright.
Determine the original author of the work.
Verify that the work is not in the public domain
Determine if the work is a “derivative work” or a “work made for hire.”
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COPYRIGHT DUE DILIGENCE (cont’d)
• Registration
Determine whether the work has been registered with the U.S. Copyright
Office.
Copyright registration is not scrutinized for validity like trademarks and
patents, thus, it is important to evaluate the validity and strength of the
copyright.
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COPYRIGHT DUE DILIGENCE (cont’d)
• License and Assignments
Carefully exam any prior transfer history to ensure that the transfer
history has been properly documented.
Ascertain the scope of rights transferred. Licensed rights may be limited
to a specific use.
• Modification History
Obtain a complete modification history of the work with a listing of all
publically available versions.
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TRADE SECRETS
• A TRADE SECRET is any information, including a formula, pattern,
compilation, program, device, method, or process:
 That derives economic value from not being readily ascertainable; and
 Is subject of efforts that are reasonable under the circumstances to maintain
its confidentiality.
• Examples: KFC’s Fried Chicken Recipe; Coca Cola Formula; customer or vendor
lists; business strategies.
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TRADE SECRET DUE DILIGENCE
• To receive trade secret protection, information must be:
1. An actual secret;
2. Protected by reasonable efforts; and
3. Valuable as a secret.
• Limitations on trade secret protection include:
 Independent discovery; and
 Reverse engineering.
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MAINTAINING A TRADE SECRET
• Limit access by reasonable efforts:
 Restrict access to the information (e.g., encryption or password protection);
 Limit the number of people who know the information;
 Execute non-disclosure and confidentiality agreements with employees,
consultants, and contractors;
 Promulgate employee and business policies regarding confidential and trade
secret information.
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MORE CHANGES IN TECHNOLOGY
• Artificial Intelligence (AI) will increasingly be used to integrate analytics and
human intelligence to automate the routine tasks of IP due diligence.
• Sophisticated custom-built automation systems will gradually replace the use of
law firm associates.
• Sophisticated modelling may assist with predicting changes in law (and
technology?)
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MORE CHANGES IN THE LAW
• Challenge to AIA on constitutionality grounds.
• Anticipate more legislation like the STRONGER Patents Act:
 PTAB proceedings would become more similar to District Court proceedings
 Limits on standing to challenge patents
 Easier to get an injunction in district court, re-establishing a presumption of
injunctive relief when a patent is found valid and infringed.
 Proving inducement would only require that the alleged infringer intended to cause
acts that constitute infringement.
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ABOUT THE FACULTY
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Cristina Nolan – cnolan@financialpoise.com
Cristina Nolan, Director of Webinar Services at Financial Poise, earned her law degree in 1997.
Cristina has worked in online education since 2004 and has significant experience in the design,
development and execution of online curriculum at the college and graduate school level. She is also
an experienced legal editor. Courses she has taught include Introduction to Legal Analysis and
Writing, Introduction to Law and the Legal Profession, Criminal Law, Business Law, Legal Ethics,
Trial and Courtroom Presentation, Wills and Estates, Family Law, Legal Philosophy, Family Law
and Divorce Mediation, Employment Law, Torts, Contracts, Employment Mediation, ADR,
Insurance Law, Product Liability, and Evidence.
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Ada C. Nielsen – ada@peregrinemaven.com
Ms. Ada C. Nielsen is a member of newly-formed formed Xinova LicensingMasters and is Managing Director of
The PeregrineMaven Group. She created The PeregrineMaven Group to commercialize inventions, & improve
profitability for new & established businesses, products & services. In addition, she is launching a consulting
practice around sustaining the business/technical cultures of creating and protecting trade secrets. She has
commercialized dozens of inventions & created new ventures in chemicals, materials & energy – as well as in
other market areas. She has been successful working for major companies (such as Amoco, BP, Nalco Chemical
Company & Chemical Waste Management) in business development, finance, sales & marketing – measured by
commercial success & an improved bottom line. She served on the board of the Association for Corporate
Growth Chicago for 7 years), is a member of Societe Chemie (NYC), & Private Directors Association. She served
as president of the Licensing Executives Society (USA& Canada) Inc. in 2010, as Wisconsin Chapter Chair for
LES, and as president of the Commercial Development & Marketing Association in 2004. She has been named
one of the Top 300 International IP Strategists for 6 years in a row (IAM Magazine). She earned an A.B. in
chemistry from Wellesley College, an M.B.A. in finance & marketing from the University of Chicago Booth
Graduate School of Business, & studied theoretical physical chemistry in graduate programs at Carnegie-
Mellon University, Tulane University & Dartmouth College. She is a Certified Licensing Professional.
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Sanjay Prasad – sanjay@prasadip.com
Sanjay Prasad has practiced at the forefront of intellectual property law for over two decades. He has
practiced in law firms in Boston and Silicon Valley, served as chief patent counsel to Oracle Corporation,
headed up the India office of IPVALUE Management and served in several senior roles at Intellectual
Ventures where he led the development of licensing programs, multiple acquisitions, and licensing and
sale transactions.
Sanjay has been repeatedly recognized by Intellectual Asset Management Magazine as one of the world’s
leading IP strategists. He has testified before a U.S. Congressional Subcommittee on patent legislation, is
a frequent speaker on topics pertaining to IP law and has served in leadership capacities on several IP
association boards.
Sanjay is admitted to practice in California, Massachusetts, the U.S. Patent and Trademark Office and
various federal courts. Sanjay earned his law degree from Syracuse University College of Law where he
was an editor of the Syracuse Law Review. He also earned an MS in Computer Engineering and a BS in
Electrical Engineering, both from Boston University.
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Eugene Goryunov – eugene@poligenes.com
Mr. Goryunov is an experienced trial lawyer that represents clients in complex patent matters
involving many diverse technologies. He is deeply involved, as trial counsel, in all aspects of cases
pending in Federal courts, at the U.S. International Trade Commission involving Section 337
investigations, and in appeals at the U.S. Court of Appeals for the Federal Circuit. He also regularly
serves as first-chair trial counsel in post-grant review trials, on behalf of both Petitioners and Patent
Owners, pending at the U.S. Patent & Trademark Office. To date, he has been involved in over one-
hundred post-grant review trials.
Mr. Goryunov is a regular contributor to intellectual property publications, including the
Intellectual Property Magazine, The Patent Lawyer, and the IPO Law Journal. To date, he has
published more than sixty articles, many of which discuss post-grant review trial practice. Mr.
Goryunov also speaks about diverse issues of patent law and post-grant review trial practice. He also
teaches patent law and intellectual property litigation at the Columbia University and previously at
the University of Notre Dame.
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QUESTIONS OR COMMENTS?
If you have any questions about this webinar that you did not get to ask during
the live premiere, or if you are watching this webinar On Demand, please do
not hesitate to email us at info@financialpoise.com with any questions or
comments you may have. Please include the name of the webinar in your email
and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily
for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education.
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ABOUT FINANCIAL POISE
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