1. Business Sense • IP MattersBusiness Sense • IP Matters Copyright 2015 ROL Group LLP 1
Counter-Assertion Value
Model
Kent Richardson & Erik Oliver
Gathering
June 11, 2015
Contact Information:
+1 (650) 967-6555
info@richardsonoliver.com

2. Business Sense • IP Matters
ROI on Your Patent Spend?
• How much should we invest in patents this year?
• Which ones should we get?
• What is my return going to be?
• Common questions
Your executive team’s questions
• What we did last year
• Peer comparisons
• Stories and negative outcomes (bad outcomes in assertions)
How do we answer?
• We have the framework in our heads to answer many of the questions. We tie our actions to our
business strategy
• But how do we articulate this?
• What about ROI?
• Questions we ask ourselves when setting a strategy
• Who are our threats?
• What is the real risk of a patent assertion/conflict?
• What is the timing, cost, probability?
• How do we optimize our spending?
Modeling the way we think
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3. Business Sense • IP Matters
Overall Process Flow
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Identify
ecosystem
risks and
corporate
asserter risks
Filter to
primary risks
Risk
assessment
Identify
overlaps
Risk
mitigation
plan
Make the
buy vs. build
decision
Playbook
development

4. Business Sense • IP Matters
Your Ecosystem of Potential Patent Risk
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Patent threats come from your near ecosystemWhat is your ecosystem?
Comp
etitors
Custo
mers
Suppli
ers
Partne
rs
You
Corporate Asserters
Your Potential Patent Risk

5. Business Sense • IP Matters
Filtering to Identify the Threats
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Your Potential Patent Risk
?? ? ?? ? ?
You
Which Risks are you going to Address?

6. Business Sense • IP Matters
Scenario Example - YouCo
• Could not have enough organic patents
High growth
• Quantity of patenting is high across products, example: How
many patents in an Android or Apple phone?
High-tech company
• Could not have old enough patents
Relatively new company
• At risk from corporate asserters and competitors
Did not focus on patents
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7. Business Sense • IP Matters
Risk Assessment and Mitigation
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Cost of capital is 10%
Company CustomerA CompetitorB SupplierC AsserterD Totals
Risk Assessment
Scale of dispute - at risk amount ($M) $50.00 $100.00 $150.00 $50.00 $350.00
Counter-assertion timeframe (yrs) 7 7 5 5
Chance of assertion (%) 2% 2% 10% 20%
Expected value of dispute at time of dispute
($M; Nominal)
$1.00 $2.00 $15.00 $10.00 $28.00
What is the annualized cost of the expected
risk? ($M; 10% cost of capital)
$0.11 $0.21 $2.46 $1.64 $4.41/yr
Risk Mitigation
How much of the risk can we mitigate
through our own patent program? Typical
values: 35-100% [66% used here] ($M)
$0.66 $1.32 $9.90 $6.60 $18.48
If we model paying for the risk in annual
payments with a 10% cost of capital, how
much should you be willing to spend each
year on a per company basis? ($M)
$0.07 $0.14 $1.62 $1.08 $2.91/yr
Potential proposed investment assuming
sufficient overlapping business units and
focused purchases and development ($M)
With overlap:
$1.62/yr?
Find the overlap to achieve the last row’s savings $2.91M to $1.62M

8. Business Sense • IP Matters
Identify Overlapping Target Revenue
Company Middleware Personal
Computers
Cloud
Infrastructure
(IaaS)
Database
Software
Wireless
Network
Products
Exposed
Revenue of
Focus Technical
Area
CustomerA - - - $1,200 $8,500 $1,200
CompetitorB $700 $22,000 $3,000 - - $3,000
SupplierC $2,000 $500 $2,500 $5,000 - $7,500
AsserterD $15,000 $1,500 - $1,500 - $1,500
Total $17,700 $24,300 $7,800 $14,200 $8,500 $13,200
Picked Focus
Technical Area
N N Y Y N
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Consider CAGR’s in selection process
CAGR 5% -5% 15% 8% 5%
All numbers in $M

9. Business Sense • IP Matters
Value of Overlapping Playbooks
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Cost of capital is 10%
Company CustomerA CompetitorB SupplierC AsserterD Totals
Scale of dispute - at risk amount ($M) $50.00 $100.00 $150.00 $50.00 $350.00
Counter-assertion timeframe (yrs) 7 7 5 5
Chance of assertion (%) 2% 2% 10% 20%
Size of asserter’s portfolio Small Medium Large Very Large
Number of counter-assertion patents needed
without overlaps
3 7 10 5 25
Number of counter-assertion patents needed
with overlaps
10
You should be willing to spend the $1.62M/yr for 5 years to develop or buy assets for your playbooks.
Could you buy these assets? Over five years, assuming today’s market pricing, yes. The purchases
would typically include 10 distinct patent families with EOUs from open market purchases. On the
order of $500K-$1M per charted family (end up with potentially 30-80 assets) for say $750K*10 =
$7.5M [compare vs. 1.62M/year for 5 years]
Commentary: What about developing your own patents (build)? In this example, no. However, with
longer term analysis, a better starting position, yes!

10. Business Sense • IP Matters
Playbook Qualification Funnel
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Technology
Area Fit
Subject
Matter and
Algorithmic
Ranking
Preliminary
Filtering
EOU
Creation
Playbook
Testing
Playbook
Entry
70% 50% 30% 5-10% 2-6% 1-3%
Typical Output as Percent of Starting Pool

11. Business Sense • IP Matters
Conclusions
• We should invest $1.62 million in patents for counter-assertion this year
• We should get patents in cloud infrastructure and database software
• The patent development program will use a 10% rate of return to address 66% of
a $350 million patent risk
The carry-away
• Provides a framework for discussion allowing you to
• 1. Present a financial a model for your patent strategy
• 2. Allow you to communicate more clearly about specific parts of your strategy
and develop buy-in from others
• 3. Adjust your strategy on a go forward basis
• 4. Show the implications of changes to your strategy
This is a model
• This is one source of value from your portfolio
Other sources of value exist
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