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1 - Sristi

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1 - Sristi
Patent Risk Management
A Comprehensive Strategy
IIMA
October 2, 2005
Mr. David Pratt, Managing Director – M·CAM
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
First Principles
Uncited
Yours
You
Competito
r
© M•CAM® 2003 - 2005
Cited Art
• Property derived from social
contract must not be breached
by applicants or granting
agencies
Partner
Dependency
• Adverse rights can create
“negative assets” where risks
outweigh benefits
Public Domain (Publici juris)
• Property is not only defined by
what you have but by
dependencies and
interdependencies held by
others
Partner
Prior
Art
The Operating System for the Knowledge Economy™
Basic Market Factors
• Fundamental shift from traditional industrial assets
– Insufficiency of current market risk rating
– Reliance on historical financials fails to predict future performance
• Capital inefficiencies
– Equity markets favor short-term performance rather than long
term returns
– Risk pooling impractical in current market
– 5-year S&P show -2.3% returns with high volatility making midterm debt more attractive for intermediate term finance
• Modern advances in computational analysis and modeling
afford new financial opportunities
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Creating Opportunity for…
• IP Financial Markets
– Pooling of Performance
• Formation of IP hedged performance vehicles constituting
pooled portfolios that are constructed with internal risk
arbitrage
• Capturing not only present value production but leveraging
Innovation Futures™
– Retail Transactions – CAPP™
• Collateralized single issuance models
• Pooled, risk-rated capital models
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Actuarial Analysis of Collateral Value
Fundamental Value Drivers
Title
•Is the patent owned?
•Is it unique?
•Who may challenge?
•Why may 3rd parties challenge?
•What are the consequences?
© M•CAM® 2003 - 2005
Secondary Market
•Is the patent “bundle-able”?
•Are the claims multi-sector?
•Are there non-aligned markets?
•How many known sales targets?
•What is the liquidity of previous
transactions?
The Operating System for the Knowledge Economy™
Critical Dependencies – Secondary Market
Pool These
Sell To These
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Underwriting
• Identify adverse selection and/or unwarranted
risks
• Standardize risk rating
– Acceptable
– Moderate
– High
• Recognize changing risk profiles for renewals
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Where are the risks?
•What countries have IP
positions?
•Who are the market
leaders?
•Where can I place a
market for my IPR or the
business it enables?
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Critical Dependencies - Actuarial
Known Obsolescence Rate
Terminal Risk
“Blind Risk” Exposure
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Who are known risks?
Who else has similar holdings?
© M•CAM® 2003 - 2005
Have original owners sold or transferred
their interest to others?
The Operating System for the Knowledge Economy™
Active Claims Mitigation
• Claim review
• Strategy development
–
–
–
–
Enforcement countersuit
Re-exam/invalidity countersuit
Hedge/acquire
License/settle
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Can patents be challenged?
Are the patents easy to enforce or are
they easily challenged based on
applicant or patent office error?
What are the known “blind-spots” from
uncited prior or concurrent, co-pending
patents that could not have been considered
by the applicant or the patent office at the
time of filing?
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
Appropriate Management
• Interests must be aligned with economic
interest
– Maximize resolution with minimal cost
• Risk hedging
• Opposition, invalidation
• Business strategy for claims rather than
abdicating to lawyers’ self interest
• Leverage patent quality deficit
© M•CAM® 2003 - 2005
The Operating System for the Knowledge Economy™
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