The Perfect Intangible StormThe Perfect Intangible Storm
October 22, 2007October 22, 2007
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The Perfect Intangible StormThe Perfect Intangible Storm
Market Forces
Economic Inversion
Auctions
IP Traded Exchange
DevelopingIP
Marketplace
DevelopingIP
Marketplace
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The Perfect Intangible StormThe Perfect Intangible Storm
History…
DevelopingIP
Marketplace
DevelopingIP
Marketplace
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Intellectual Property Intellectual Property MarketplaceMarketplace
Mark
et
Qu
ali
ty
Historical Present Future
High
Low
Royalty Based
IndustryLicensing
Litigation
DefensiveCross
Licensing
Expansion
Licensing
Motivated by threat of enforcement
High frictional cost of transactions
Beginnings of IP as an income stream
Period of feudal lords
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Intellectual Property Intellectual Property MarketplaceMarketplace
Mark
et
Qu
ali
ty
Historical Present Future
High
Low
Royalty Based
IndustryLicensing
Litigation
DefensiveCross
Licensing
Public Auctions
Web Portals
/ Listing
s
ExpansionLicensing
P-LEC’s
IP Based Financin
g
Patent Pools
Period of trial and error
“Do as I say not as I do”
Based on IP as valuable separate from the core
business
Rise of the intermediaries
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Intellectual Property Intellectual Property MarketplaceMarketplace
Mark
et
Qu
ali
ty
Historical Present Future
High
Low
Royalty Based
IndustryLicensing
IP Indexes
Litigation
DefensiveCross
Licensing
Public Auctions
Patent Royalty Trusts
Web Portals
/ Listings
ExpansionLicensing
IP for the masses
Invested as an asset class
Age of the Golden Rule
P-LEC’s
IP Based Financing
IP Exchange / Board of
Trade
Patent Pools
Hedge Funds
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The Perfect Intangible StormThe Perfect Intangible Storm
Market Forces
Economic Inversion
Auctions
IP Traded Exchange
DevelopingIP
Marketplace
DevelopingIP
Marketplace
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Economic InversionEconomic Inversion
16.8%
83.2%
32.4%
67.6%
68.4%
31.6%
79.7%
20.3%
0%
20%
40%
60%
80%
100%
1975 1985 1995 2005
Componentsof S&P500MarketValue
16.8%
83.2%
32.4%
67.6%
68.4%
31.6%
79.7%
20.3%
TangibleAssets IntangibleAssets
16.8%
83.2%
32.4%
67.6%
68.4%
31.6%
79.7%
20.3%
16.8%
83.2%
32.4%
67.6%
68.4%
31.6%
79.7%
20.3%
Source: Ned DavisResearc
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Economic InversionEconomic Inversion
Quantitative evidence of transition to “knowledge economy”
Antiquates current accounting and SEC reporting requirements
Greater asset volatility without traditional risk management and risk transfer
Suggests need to greater intangible asset process and control requirements
Likely permanent change to US economy
Likely to be repeated internationally
Further complications comparing and valuing intangible assets across national borders
Intangible assets to deliver investor returns“U.S. intellectual property is worth $5 Trillion to $5.5 Trillion…
that’s more than the gross domestic product of any other country.”Business Week.com, March 28, 2007 citing economists Kevin Hassert and Robert Shapiro
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The Perfect Intangible StormThe Perfect Intangible Storm
Market Forces
Economic Inversion
Auctions
IP Traded Exchange
DevelopingIP
Marketplace
DevelopingIP
Marketplace
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Ocean Tomo Live IP AuctionsOcean Tomo Live IP Auctions
Ocean Tomo Auctions has established itself as the leader in the live auctioning of Intellectual Property through four successful events, which resulted in over $50M of transactions for some of the world’s largest and most established companies.
The Ocean Tomo Live Intellectual Property Auctions have received considerable national as well as worldwide media attention, including features and appearances on CNBC, Bloomberg TV, The Wall Street Journal, Washington Post, Chicago Tribune, Forbes, FinancialTimes Barron’s, Red Herring, BusinessWeek, and CNET, among others.
Past Participants include:
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Ocean Tomo AuctionsOcean Tomo Auctions
Traditional live auction held three times each year
6 to 12 month process
Each auction tied to an investment summit or conference
Includes all categories of IP sold in related groups or Lots
Traditional auction economics and commissions
Public forum with expansive participation by third party market makers
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Auction ResultsAuction Results
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Live Public Auction ProcessLive Public Auction Process
Submission of IP for sale
IP Qualification by Ocean Tomo
Acceptance of IP into Auction
Submit
Review
Private Due Diligence Meetings
Information Submitted to Online Data Room
• Patent numbers• Current assignees• Description of patents• Rights being sold• List of licenses or encumbrances• Due diligence materials• Availability of prototypes• Additional technology or know-how
offered• Availability of consulting services
Bidder Registration
IP rights
DollarsLIVE IP AUCTIONS
IP rights Dolla
rs
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Auction Process (licensing)Auction Process (licensing)
10/30/200737 CFR 404.7(a)(1)(i)
Fed. Reg. Notice of Prospective License
15 day Obj. Period
Agency and OTFS select patent(s) to be
licensed
OTFS wires Agency portion of funds
2/24/2008Sub-license granted / license is transferred
to winning bidder
Ocean Tomo Live Auction Date
Winning bidder wires OT funds
OTFS applies for license of selected technology(ies)
with right to sub-license or transfer license
Ocean Tomo Live Auction Date
(unsuccessful transaction)
If significant interest but reserve not met,
OTFS will continue to market technology(ies) under private sale process
Ocean Tomo Federal Services Live IP Auction Timeline
10/4/2007
OTFS Pre-qualifies biddersFor Agency lots in Auction
OTFS license granted;Documents go into Online data room;
OTFS begins to market the availability
of the licensed technology
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Auction Process (licensing)Auction Process (licensing)
License Granted(Transaction Closes)
37 CFR 404.7(a)(1)(i)Fed. Reg. Notice of
Prospective License
NASA Receives35 USC 209
Commercialization Plan from Auction Winner
Agency ConsignsIP Lots to
Ocean Tomo
OTFS wires Agency portion of funds
Ocean Tomo Live Auction Date
(unsuccessful transaction)If significant interest but reserve not met,
OTFS will continue to market technology(ies) under private sale process
Ocean Tomo Federal Services Live IP Auction Timeline
10/4/2007
37 CFR 404.7(a)(1)Fed. Reg.
90-Day Public Notice of Availability
90-Day Notice Period
Ocean Tomo Live Auction Date
Documents go into Online data room;OTFS begins to market the technology;
Pre-qualify bidders based on commercialization requirements
15 day Obj. Period Comm. Plan Approved
Payment From LicenseeDue to Ocean Tomo
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The two part process: use of the auction to test pricing followed by off floor sales
“Quality” closely related to technology-in-use
Management of seller expectations and reserves
Need for process to adjust reserves in the greenroom
Balancing of risks versus simplification of bidder diligence
Emergence of true arbitrage risk investors
Confirmation of general strategy of auction environment and extended development cycle
Lessons LearnedLessons Learned
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October 24 and 25, 2007 in Chicago Catalog available online at www.OceanTomoActions.com Featuring patents in digital home media, financial services,
e-commerce, near field communications, WIMAX, web services and audio signal processing technology
April 2008 in San Francisco All IP asset categories
June 2008 in Amsterdam All patent lots to include EU assets Simulcast to Asia
Upcoming AuctionsUpcoming Auctions
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The Perfect Intangible StormThe Perfect Intangible Storm
Market Forces
Economic Inversion
Auctions
IP Traded Exchange
DevelopingIP
Marketplace
DevelopingIP
Marketplace
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Tradable Technology Baskets™Tradable Technology Baskets™
PatentTechnologyBaskets
PatentTechnologyBasketsrepresent the maintenancevalue of patents in a specifictechnology sector. OceanTomo'sPatentRatings® systemcalculates themaintenancevalue of all patent inforce on aweekly basis.
Basket Patents
Technology Close5/25/07
Change Total New Exp./Abndn
Avg.IPQ
PatentNumber
Assignee Weeks #1
Professional and scienti¼c instruments 24,631 -3.7% 300,301 56 13 123.3 6,534,124 ABCCorp. 3Electroniccomponents, accessories &comm. eqp. 23,708 -5.0% 150,00 3 12 109.2 6,645,212 123Corp. 54Of¼cecomputing & accounting machines 13,289 -3.4% 230,021 45 47 102.2 6,341,132 ABCCorp. 5Drugs and medicines 5,749 -4.5% 392,292 79 4 143.2 7,001,921 123Corp. 45Agricultural chemicals 5,631 -4.5% 47,029 7 78 123.2 6,102,021 ABCCorp. 32Industrial organic chemistry 5,395 -4.7% 23,022 6 56 111.1 5,901,029 123Corp. 1Miscellaneous electrical machinery, eqp. & supplies 4,105 -3.2% 92,029 57 43 89.8 6,102,920 ABCCorp. 4Rubber and miscellaneous plastics products 3,921 -4.6% 283,928 49 7 124.2 6,209,092 123Corp. 55Electrical transmission & distribution equipment 3,053 -5.1% 298,837 79 5 132.2 6,987,098 ABCCorp. 4Fabricated metal products 3,050 -3.8% 23,292 6 45 122.7 5,908,987 123Corp. 9
Highest Rated Patent
www.ipxchicago.com
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Tradable Technology Baskets™Tradable Technology Baskets™
Importantly, for the first time in financial history, IPX Chicago will enable direct investment in technology and patent specific financial instruments. Tradable Technology Baskets (“TTB”) represent a series of traded contracts enabling investing and hedging with respect to the economic value of an industry-wide patented technology class (e.g. hybrid electric vehicle technology), derived by proprietary analytics.
This product will be used by participants to speculate on the future value of the technology class or by technology owners to hedge against the risk of competing technologies and lower their cost of capital.
Enables most efficient investment in the long term prospect of specific technologies.
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Unit License Rights™Unit License Rights™
Unit License Rights (“ULR”) enable holders and exclusive licensees of IP to extend traditional private licensing of technology to an exchange traded product.
Will lead to increased price discovery, efficiency, transparency in the growing licensing environment.
Exchange trading will dramatically increase the number of potential participants in the marketplace.
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Unit License Rights™Unit License Rights™
CORE DESCRIPTION OF FORD ULR BETA TRADEULR: F6260531 Valve Seat InsertPATENT: 6,260,531 and continuations, continuations-in-part and foreign
counterparts. LICENSED FIELD OF USE: AllRESTRICTIONS: All secondary sales through IPXISSUER RIGHT TO USE: YesUNIT BASIS: One ULR covers one automotive or light truck engineTOTAL OFFERED QUANTITY: 5 million license units offered in 50 unit lotsOFFERING TERM: 3 yearsTERM OF LICENSE: Until consumed
TRAUNCHES1st: 1 million ULR’s at an initial offering price of $0.50 per unit (eg unit 1)2nd: 1 million ULR’s at an initial offering price of $0.75 per unit (eg unit
1,000,001)3rd: 3 million ULR’s at an initial offering price of $1 per unit (eg unit
2,000,001)
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Ocean Tomo Federal Services Ocean Tomo Federal Services OverviewOverview
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Ocean Tomo Federal Services - A Company Ocean Tomo Federal Services - A Company Built on IdeasBuilt on Ideas
idea: Host live IP auctions to create a more liquid market.
reality: The first-of-a-kind live auction of patents followed by the first live auction of patents, trademarks, copyrights & domain names. Now a bi-annual event in the U.S. and an annual event in Europe.
idea: Create an online classified market for IP.
reality: The Dean’s List™ Online Intellectual Property Exchange, the first classified forum focused on IP, brings together buyers and sellers in a platform unlike anything currently offered in the market.
idea: Create a stock index that tracks the knowledge economy.
reality: The Ocean Tomo 300™ Patent Index, priced and published by the American Stock Exchange®, is the first equity index based on the value of corporate IP.
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Contact InformationContact Information
CHICAGO200 West Madison
37th FloorChicago, IL 60606(312) 327-4400 Ph(312) 327-4401 Fx
DC METRO7475 Wisconsin
Ave.Suite 525
Bethesda, MD 20814
(240) 482-8200 Ph(301) 652-2885 Fx
ORANGE COUNTY19200 Von Karman
Ave. Suite 600
Irvine, CA 92612(949) 222-1264 Ph
www.patentratings.com
PALM BEACH235 S. County Road
Suite 1Palm Beach, FL
33480(561) 309-0011 Ph(561) 805-8765 Fx
SAN FRANCISCO101 Montgomery
StreetSuite 2100
San Francisco, CA 94104
(415) 946-2600 Ph(415) 946-2601 Fx
Michael Walker7475 Wisconsin Avenue,
Suite 525Bethesda, MD 20814(240) 482-8202 Ph(301) 652-2885 Fx