Intellectual Property Strategies for Solving Conflicts, Speeding Adoption and Rewarding Innovation

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1 Intellectual Property Strategies for Solving Conflicts, Speeding Adoption and Rewarding Innovation Dan Abraham Vice President, Science and Business Strategy

2 Acknowledgements Matt Rappaport, Managing Director, IP Checkups John Platt, Partner, Snell & Wilmer Larry Horn, CEO, MPEG LA LLC Peppino Kim Jonathan Brown Jessica Sullivan Jako Eleveld, Head of IP Licensing, Philips

3 Agenda Intellectual Property has become a valuable and contentious asset in the Advanced Battery Industry Drawing upon lessons from other industries, we will address how IP creation and enforcement may affect a burgeoning industry We will explore: Strategies for avoiding battery IP wars in a manner that fosters industry-wide development and growth New opportunities for making IP rights widely available while rewarding IP owners for their innovation

4 What Does the Advanced Battery IP Landscape Look Like? Advanced Battery & Capacitor PatentEdge

5 Battery Patent Trends Overview Nearly 19,000 battery patents & apps published worldwide ~ 1500 per month Overall, activity grew by % from WO EP Grants EP Apps US Grants US Apps

6 Battery Patent Trends Assignees Top 10 assignees account for nearly 1/3 of all patents published in 2015 Samsung, LG, & Toyota remain the top assignees. 70% are US patents WO - App EP - Grant EP - App US - Grant US - App

7 Battery Patent Trends 2015 Large Companies Large companies maintain different geographic filing strategies USA USG EPA EPB WO 0 Samsung LG Toyota Panasonic Ford

8 Battery Patent Trends 2015 Large Companies Large companies focus filings on different technology areas Batteries Cells Hybrid Systems Markets Materials Usage/Lifecycle 0 Samsung LG Toyota Panasonic Ford

9 Battery Patent Trends 2015 Large Companies Large companies US & WO patent filing velocity FORD LG PANASONIC SAMSUNG TESLA TOYOTA

10 Battery Patent Trends 2015 Silicon Valley Silicon Valley companies patent filing velocity Tesla announces opening its portfolio in June of APPLE GOOGLE TESLA

11 Battery Patent Trends 2015 Notable events 2014 Tesla offers IP for use on good faith basis Toyota offers ~ 6000 fuel cell patents on a royalty free basis Unified sets up Automotive Zone Toyota, Honda & 20 others join Ford subscribes to Intellectual Ventures, RPX and LOTNET Hyundai/Kia joined the Open Invention Network Community Youxia X unveils a copy cat of the Tesla model S

12 Li-Ion Electrolyte Patent Assignee Dependency by Citation

13 Lawsuit Cout Growing Industry + Increasing IP = Litigation 25 All Li-ion Battery Lawsuits per Year 21.2% CAGR between 2002 and % CAGR between 2002 and Year Lawuit Started Patent Infringement ITC Action PTAB Petition Source: RPX/PatentFreedom

14 A Few Exemplary Patent Litigation cases: Hydro-Quebec / University of Texas v. A123, Black & Decker, Segway, etc. - cathode materials for rechargeable lithium batteries, 6 patents, 5-6 year litigation battle. Settled in BASF / UChicago Argonne (LG, GM) v. Umicore Lithium metal oxide electrodes 2 patents 6,677,082 and 6,680,143. Filed Issued Preliminary Judgement, ongoing Northern Cable and Automation LLC v. General Motors Co. hybrid vehicle battery connector part. Patent filed US Patent 7,976,333. Suit filed July 2013, ongoing. LG Chem v. SK Innovation v. Celgard battery separator membrane for Rechargeable Lithium Battery US Patent 6,432,58, filed 2000, issued On going litigation. Milwaukee Electric Tool Corp v. Snap-On, Inc., - multi-cell lithium ion batteries in cordless electric tools. 3 patents, filed ~2002, issued Settlements with various cordless tool companies.

15 Estimated Cost to Li-Ion Battery Industry thru 2020 Median Case 90 th Percentile Cost per Litigant (1) $5M $12M Estimated cost 2002 to 2015 (2) Projected cost for next 5 Years ( ) (3) $260M $624M $462M $1108M Total Cost to 2020 $722M $1732M Including PTAB $768M $1800M (1) Based on AIPLA 2015 Report of Economic Survey (2) 50 cases for Li-ion Battery patent infringement cases and 2 ITC cases (3) Using a 17% CAGR and a base of 10 infringement cases started in 2015; excludes PTAB cases

16 Patent Strategies Establish a Patent Program Create an Effective Patent Portfolio Know your Competitor s IP Landscape searches File Blocking Patent Applications/White Space Applications Patent Aggregation Strategies

17 Problems with Thickets Complementary blocking IP Uncertain Freedom to Practice Litigation Risk Licensing is expensive and time consuming Royalty Stacking Uncertainty in Market Adoption

18 Patent Thicket Perfect Storm

19 MPEG LA Licensing Model One-to-Many Many-to-One MPEG LA Many-to-Many Licensing Model IPR IPR IPR IPR IPR IPR IPR IPR IPR IPR Patent Thicket Licensee Licensee Licensee Licensee Licensee Licensee Licensee Licensee Licensee Licensee MPEG LA pioneered modern patent pool licensing with the MPEG-2 Video Standard 4 * IPR=Intellectual Property Rights

20 MPEG LA Licensing Model MPEG-2 became the most successful standard in consumer electronics history The solution became the template MPEG LA has operated patent pools around many of the world s most successful technologies consisting of some 11,000 patents in 80 countries with more than 200 patent holders in industry and academia and more than 6,000 licensees MPEG LA is also working on molecular diagnostics, oligonucleotide therapeutics, gene editing, medical devices, energy storage and nanotechnology 6

21 A Few MPEG LA Patent Pools Currently 27 patent owners 1082 patents in 57 countries 1791 Licensees Currently 10 patent owners 520 patents in 28 countries 166 Licensees February 14, 2016 Data

22 LFP Joint Licensing Effort (est. 2011) Sud-Chemie UT Austin CNRS Aleees Hydro-Quebec U of Montreal A123 LiFePO4+C Licensing AG Sumitomo Cement Sud-Chemie A123 BASF Adv Lith Elec Mitsui Eng Ship Mitsui Eng Ship Sony Aleees Tatung NTT

23 Advanced Batteries - A Pool Whose Time has Come? Benefits of a battery patent pool o o o o o o o o o Wide access to important technologies Transparency Transactional efficiency Freedom to operate Reduced royalty stacking Reduced litigation risk Predictability Substantial mass market returns to technology owners from worldwide adoption of their assets at substantially reduced cost The credibility of an independent and trusted pool licensing entity recognized for its experience, impartiality and fairness in managing patent pools 3

24 Potential Battery IP Pools IPR IPR IPR IPR IPR Cathodes Separators Anodes BMS Electrolytes Inverters Charging Safety Integration Licensee Licensee Licensee Licensee Licensee Licensee

25 In Summary Energy Storage is a game changing platform technology IP skirmishes in a burgeoning industry can derail the best of intentions Utilize IP strategies shown to be successful in other game changing industries IP aggregation solves many of the bottlenecks for commercializing new technologies

26 Contact: Dan Abraham Tel , x166