Guiding Clients Through an IP Property Protection and Leveraging Analysis

Going through a strategic process such as the IPPLA is a particularly important growth step given today’s economy and capital market creditors because:

� Fast-track growth companies must protect what they have and use their intangible assets to penetrate new domestic markets or fuel international expansion. The key challenge is how to keep growing in a slowing economy.

� Capital-efficient growth is the mandate of many CEOs and CFOs during these turbulent financial markets.

� Companies of all sizes and in all industries are under pressure to create new opportunities and new revenue streams from existing assets (technologies, systems, brand, relationships, know-how, etc.). The results of the IPPLA may also identify a need or an opportunity to restructure the company around the IP portfolio, create subsidiaries or spin-out companies based on IP leveraging opportunities.

� Entrepreneurs and growing businesses need to periodically re-evaluate whether current distribution channels and market-partners are really working effectively to generate the highest and best shareholder value and income streams/profits (e.g. Is this the highest and best strategy available to meet the company’s objectives? What is the origin of these relationships? What politics or red tape will the company face if these agreements and relationships are re-evaluated? Should there be restructuring around a real or perceived imbalance in the economics of any existing relationships? Wall Street does not reward companies who make their licensees and market partners wealthy at the company’s expense.)

� Companies need to repair channels and relationships that are broken or ineffective; or companies need to improve management of channels in order to yield better results.

� With high levels of employee turnover and competition for a qualified work force, it is more important than ever that employees are educated on their obligations to protect the company’s IP on an in-term and post-term basis.

� From a licensing-out perspective, many companies may be sitting on a portfolio of patents, technologies and brands that can be licensed in non-competing ways to augment existing initiatives and core businesses.

� Even from a licensing-in perspective, growing companies may not have the resources to conduct research and development at the same levels and may need or want to explore access to technologies and brands which are already established or readily-available on an off-the-shelf basis and coupled with training support and valued-added services or where Goliaths will partner with David to get access to resources and technology. There may also be licensing-in opportunities which, when paired with the company’s current technology portfolio, can create new products, services and market opportunities.

� Technology licensing, brand-extension licensing, joint ventures and strategic alliances, business format franchising, and outsourcing are all intellectual property leveraging strategies which are being regularly discussed and adopted inside today’s corporate boardrooms, and need to be coupled with an effective IP portfolio analysis to be effective. Various intellectual property-leveraging strategies are often precursors to capital formation transactions, such as venture investments, acquisitions, especially in David/Goliath transactions, as well as peer-to-peer transactions.

� In today’s merger and acquisition frenzy, an IPPLA may be an excellent way for a growing company to prepare for a buyer or a merger partner’s due diligence process in order to ensure that gaps in the chain of title are filled or any potential disputes over ownership are resolved. The results of the IPPLA may also be necessary to support the company’s proposed valuation if and when it is a target in an M&A transaction. The IPPLA can also be a good opportunity to examine the client’s current IP docketing and database management systems.

� In an environment of market relationships that are constantly changing and evolving, an IPPLA will help the client determine whether any assets in the IP portfolio are subject to the rights of third parties, which may exist by virtue of co-authorship, co-investorship, joint venture, teaming, co-branding, license or statutory or contractual rights of termination or reversion.

� Many emerging growth companies simply do not have the time, resources or expertise to identify development and implement new strategies for leveraging their IP portfolio without the help of a catalyst. Others simply may need a fresh look or new perspective as to how their IP can be leveraged (classic “can’t see the forest for the trees” syndrome).

The driving force behind the need for a strategic review and analysis of the company’s intellectual property assets may be the senior management of the company, the chief patent counsel or even board members/outside shareholders (or venture capitalists in earlier-stage venture-backed companies) who are pressuring the company to produce new revenue streams before another infusion of capital can or will be committed. The focus of the review may be on the following practices:

� To determine the origin of intangible assets and the extent of the client’s interest in technology and related intellectual property rights;

� To determine the scope of rights that third parties may have, by license, ownership, or otherwise, in the client’s assets;

� To institute systematic procedures for protecting and perfecting the company’s intellectual property rights;

� To detect defects in the company’s existing intellectual property assets and establish the mechanisms and procedures for protecting and perfecting the same;

� To take steps to prevent the assertion of some of the more common defenses available to misappropriators and infringers (such as estoppel, laches and waiver); and

� To avoid liability for third party claims of infringement resulting from the development of new products.