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Ken SeddonCEO, LOT NetworkNovember 8, 2017

Invest in GrowthHow LOT Network Addresses the PAE Problem

Introduction of Ken Seddon

25 Years of Engineering and IP experience

LOT Network CEOKen Seddon

• BS. EE Georgia Tech, Master’s Device Physics from ASU, JD from ASU• Motorola: engineer and patent prosecution• Intel: Asst. Director of Patents - patent prosecution and licensing• Numonyx: Chief IP Counsel• Micron: Asst. General Counsel• Apple: Strategic patent licensing, patent purchasing, NPE defense• ARM: VP of IP

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Why you should join LOT Network

$29 Billion

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PAEs - hurting innovation

PAEs are responsible for 84% of high-tech patent litigation

in the US!7

PAEs drain ~$80B from the US economy per year,

or $1.5B a week10

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PAE84.1%

OperatingCompanies15.9%

Patent lawsuits have jumped 500% between

2005-2014

Defendants added to NPE Campaigns Quarterly

AIA

New pleadingrequirements

Dan McCurdy 2017 SAS NPE Forum and RPX Average

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Where are the PAEs getting their patents?

Companies provide PAEs with the most of the patents

Operating Company81%

Inventor/University19%

81% of patents acquired from PAEs come from

companies7

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LOT Agreement is scaling

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LOT Begins

LOT Agreement is scaling

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LOT 2.0

LOT Agreement is scaling

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LOT 2.0

LOT Agreement is scaling

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LOT 2.0

HyundaiLenovoNissanHonda

Cisco

AmazonAlibaba

eBayNetAppElectronic ArtsTeslaVolkswagenSalesforceOracle

Who is joining and why?

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Some of LOT’s 178 members

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Software:

Hardware:

Some of LOT’s 178 members

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Automotive:

Financial Services

Some of LOT’s 178 members

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Entertainment/media

Retail:

Key Others:

● Startups and small companies are softest targets for trolls− 50% of all companies sued by trolls

make less than $10 million/year− Over 50% of all patent lawsuits

concern software patents†

What about small companies?

† GAO report on IP: http://www.gao.gov/products/GAO-13-46514

1/3rd of LOT Members are start-ups

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What is LOT Network?

LOT - community providing PAE immunization

Community Non-Profit Protecting Innovation

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A license to the other members of LOT Network that applies ONLY on and after transfer of the particular

patent to a patent assertion entity (License on Transfer - LOT)

How LOT Protects Members

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No effect on traditional uses of patents

LOT - community providing PAE immunization

Free toCross License

Free toAssert

Free toDo Nothing

Free toSell

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No effect on traditional uses of patents

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No Burden to being a member

Don’t have togive notice

Don’t have tolist patents

Don’t have toreport

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A patent holder, in combination with its affiliates, that generates more than 50% of its

gross revenue from patent assertion.

What is an assertion entity?

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How LOT works

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Illustration of the LOT Agreement's OperationToday: Companies 1 and 2

join the LOT Network.

Over 797,000 WW assetsOver 225,000 US assets

Future: LOT membership immune from patent, regardless of the owner.

Legend:= Transferred patent(s)

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Tomorrow: Company 2 sells a patent to a Patent Assertion Entity.

License to LOT membership automatically becomes effective.

Illustration of the LOT Agreement's OperationTomorrow: Company 1 sells a

patent to an Operating Company

Legend:= Transferred patent(s)

Today: Companies 1 and 2 join the LOT Network.

Over 797,000 WW assetsOver 225,000 US assets

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OP COC

OP COD

OP COG

OP COH

OP COE OP CO

F

License to LOT membership automatically becomes effective

when transferred to PAE.

Illustration of the LOT Agreement's OperationToday: Companies 1 and 2

join the LOT Network.

Over 797,000 WW assetsOver 225,000 US assets

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Tomorrow: Company 2 becomes an assertion entity

License to LOT membership automatically becomes effective.

LOT Network is non-profit: Annual Fee

LOT Member’s Annual Revenue Annual Membership FeeLess than $5 million Free

Between $5 and $10 million $1,500

Between $10 and $25 million $2,500

Between $25 and $50 million $5,000

Between $50 and $100 million $10,000

Between $100 million and $1 billion $15,000

Greater than $1 billion $20,000 (cap)

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LOT provides value to its members

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Analysis of assets litigated by PAEs

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What types of patents did trolls use to sue in the US in 2015? (3,608 litigations)

# of

pat

ent a

sset

s

0

40

80

120

160

G06F H04L H04W G06Q H04M H04N G11C G11B B60R G06K

15161718

4646

7283

150155 G06F - Digital Data Processing

H04L - Transmission of Digital InformationH04W - Wireless Communication NetworksG06Q - Data processingH04M - Telephonic CommunicationH04N - Pictorial CommunicationG11C - Optical elementsH04B - TransmissionG11B - Radio ReceiversB60R - MirrorsG06K - Data Recognition

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# of

pat

ent a

sset

s

0

12,500

25,000

37,500

50,000

G06F H04L H04W G06Q H04M H04N G11C G11B B60R G06K

606764222221397

40751

396252348908

11604

41208

1516171846467283150155

LOT has thousands of patents in the same areas as those PAEs are asserting in the US

G06F - Digital Data ProcessingH04L - Transmission of Digital InformationH04W - Wireless Communication NetworksG06Q - Data processingH04M - Telephonic CommunicationH04N - Pictorial CommunicationG11C - Optical elementsH04B - TransmissionG11B - Radio ReceiversB60R - MirrorsG06K - Data Recognition

LOT has over 506,000 assetsin the exact areas that

PAEs are asserting in the US.(797,000+ Overall)

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Analysis of assets bought

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2015 Patent sales: Forecast of future litigation#

of w

w p

aten

t ass

ets

0

750

1,500

2,250

3,000

G06F H01L H04L G11C H04W H04N H01M H04M G06Q H04B G11B G03F G06K H03K H04Q

205210219221230264

465466491535708

1657

210122442305

Data from:

Top 15 patent categories for 16,634 assets sold in 2015

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2015 Patent sales: Forecast of future litigation

Data from:

# of

ww

pat

ent a

sset

s

0

12,500

25,000

37,500

50,000

G06F H01L H04L G11C H04W H04N H01M H04M G06Q H04B G11B G03F G06K H03K H04Q

217378

6067434622212405

52343962263

40751

8908

397

116048632

41208

2052102192212302644654664915357081657210122442305

LOT has over 566,000 assetsin the exact areas as the patents

bought in 2015(797,000+ Overall)

Top 15 patent categories for 16,634 assets sold in 2015

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Yeah, but does LOT REALLY work?

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LOT Members have divested assets, but…

No LOT Member has ever been sued by an asset that has left the

Network

• 35 of those assets have landed in the hands of 8 different PAEs

• One of those PAEs is Intellectual Ventures

Data from:35

Are you an Optimist?

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Are you an Optimist? LOTimist?

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LOT Members are OptimistsThe “LOT Member Index” = all publicly traded members of LOT

• includes those that have struggled recently (e.g. retailers)

LOT members have out performed the S&P 500® by 90% in last year

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MonetizersThe “Monetizers index” = Most active monetizers in recent years

• IBM, Philips, Yahoo, Qualcomm, Ericsson, Nokia, Technicolor, Sony, Tivo, Dolby

Monetizers lag S&P 500® by 87% in the last year

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Are you a LOTimist?

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● Oracle, FIS, Qualtrics, Target, TS Tech America, and Alcatel Lucent Enterprise have already joined

● Facebook, Vanguard, Covestro, eHarmony, TD Ameritrade, Bank of Canada, Bank of Montreal all expect to join by end of next week

● These companies are joining now - to ensure they were immunized to all 50k assets that are currently included in Google’s membership in LOT

● There is a significant advantage to joining sooner rather than later

Cause of recent growth spurt

43http://www.businessinsider.com/ap-google-forms-a-new-holding-company-alphabet-2015-8?IR=T

Backup

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References1. Patent Freedom

• https://www.patentfreedom.com/about-npes/litigations/2. James Bessen & Michael Meurer, The Direct Costs from NPE Disputes, 99 Cornell L. Rev. 387 (2014).3. RPX 2014 Litigation Report.

• http://www.rpxcorp.com/wp-content/uploads/sites/2/2015/03/RPX_Litigation-Report-2014_FNL_040615.pdf4. US Patent and Trademark Office

• http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm5. ROL Group

• http://www.richardsonoliver.com/news/2014/12/1/buyers-and-sellers-in-the-2014-brokered-patent-market6. Linda Biel, AST 7. Dan McCurdy, RPX presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA. 8. Kevin Jakel, Unified Patents presentation at 2015 IP Counsel Cafe spring meeting, Palo Alto, CA.9. Mark Lemely & Douglas Melamed, Missing the forest for the Trolls, Cornell Law Rev. 2013.10. Robert Gebelhoff. (2015, November 23). ‘Patent trolls': Reading the comments. The Washington Post. Retrieved from https://

www.washingtonpost.com/news/in-theory/wp/2015/11/23/patent-trolls-reading-the-comments/ (© 2015)

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Significant Value in adding suppliers to Membership

Significant value in adding some

Suppliers

Both Suppliers and Customers get

protection from patents outside their bilateral

ecosystems

Company A Company B Company C

Suppliers Suppliers Suppliers

Value

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Why LOT is good for BUYERS

Help save $29 billion

Can trustsuppliers

Stabilizesupply chain

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Why LOT is good for SUPPLIERS

Data from:

Reduce indemnification costs

Become “preferred” supplier

Gain access to IP

Program voluntary

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