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IP Osgoode

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IP Osgoode & Hennick Centre for Business & Law 2010 Conference February 11, 2010 AGENDA Introduction to McLean Watson & i4i The i4i Story Lessons Learned Q&A MCLEAN ... – PowerPoint PPT presentation

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Title: IP Osgoode


1
IP Osgoode Hennick Centre for Business Law
2010 Conference February 11, 2010
2
AGENDA
  • Introduction to McLean Watson i4i
  • The i4i Story
  • Lessons Learned
  • QA

3
  • MCLEAN WATSON THE WORLD OF VCS

4
MCLEAN WATSON
  • Tight knit group with shared values and
    complementary investment styles. 15 year track
    record of top quartile Venture Capital Investing
    in North America Asia.

4
5
MCLEAN WATSON HISTORY
  • 1820 Trading Company
  • 1972 School friends
  • 1987 1994 Softimage Financing IPO
  • 1994 Sale to Microsoft
  • 1996 Fund 1 1999 Fund 2
  • Today 300M AUM, Canada - Singapore

6
LEADERSHIP INNOVATION
1st Quebec IPO on Nasdaq 1992 - Softimage
1st Software only fund in Canada 1996
1st VC in natural resources technology Only Canadian VC in this area - 2000
Only Canadian VC in Singapore/Asia Since 1999
Unique Asian Investor Links Singapore Government (1999) Brunei Investment Agency
1st Canadian VC lead IPO in Singapore Ntegrator (2005)
1st Canadian VC patent enforcement/monetization i4i (2004-2009)
6
7
GROWTH RECORD
Company Stage of Investment MW Role Result
FloNetwork (email marketing) 2 founders, 1 emp, no product Lead investor, Chair Largest investor Sold to DoubleClick for 85M
Fortiva (data management) FloNetwork founder incubated in MW office Lead investor, Director, Largest investor Sold to Proofpoint for 25M
i4i (XML software) 2 founders, no emp or product Lead majority investor, Chair drove IP strategy Awarded US300M injunction vs. Microsoft
SkyWave (satellite M2M, asset tracking) 4 founders, introducing product Lead investor, Chair MW partner now CEO Raised US 23M Inmarsat - 105M value
CTL Immunotherapies (cancer vaccines) Incubated in MW office, 1 founder, no emp Lead investor, Director Merged to form Mannkind Now Mannkind pubco - 800M mkt cap
7
8
GROWTH RECORD
Company Stage of Investment MW Role Result
Ntegrator (telcom services) 4 founders Lead investor, Largest investor IPO in Singapore
Lavalife (data management) Established, but needed web strategy Director, Change Agent Sold to XXX for 130 million
Vismand (technology-driven exploration) concept Lead majority investor, Chairman Raised 20 million, actively exploring
Quantec (geophysical services, deep imaging) Operating long term, but no proprietary product finished prototype stage Lead investor, Chairman MW partner now CEO, Barrick, Noranda and Govt. Sask all invested, 1 in mining geophysics
Softimage (3D animation SW) 1 founder, 2 emp, no product, concept only Lead investors, 2 directors, Co-COOs for 1 yr IPO on Nasdaq sold to Microsoft for 200m
8
9
Asset Management and Security via Satellite
10
BelAir Networks
Integrated Mobile Broadband Network Wi-Fi, WiMAX
and Cellular
11

IT Applied to Geophysics Underground Snapshot
12
  • I4I STORY

13
CHAPTER 1 MEETING MICHEL
  • Meeting
  • Competition
  • Promise Handshake
  • i4is Office
  • i4is Vision
  • SGML
  • XML

14
CHAPTER 2 RD/PATENT
  • 1994 filed for US patent 5,787,449
  • Tweed jackets and blackboards
  • Evangelists

15
CHAPTER 3 GROWTH FUTURE
  • 1998 Patent Issues
  • Oracle of unstructured data
  • Overthrowing the Tyrant
  • Key Customers - USPTO
  • 9/11
  • White Papers, Green Papers
  • What it is used forpharma, carriers, plane,
    tanks, financial services, manufacturing
  • The Henry Ford of data manufacturing

16
CHAPTER 3 GROWTH FUTURE
  • NASA
  • Awards
  • Articles
  • Top CTOs Founders
  • Robot
  • Newbridge

17
CHAPTER 4 SURVIVAL?
  • 2002 - massive change in sales pipeline
  • Internal adjustments
  • Every second light bulb removed
  • Refocus on pharma industry
  • Then more focus...on labels

18
Sent Tuesday, January 27, 2004 1124 AM
  • Loudon Owen
  • From mvulpe mvulpe_at_i4i.com
  • Sent Tuesday, January 27, 2004 1124 AM
  • Subject patent issues with microsoft
  • To be very serious here - MS has filed a patent
    application in the EU that
  • appears to be what we are doing in x4o and have
    been for many years
  • - it may also be an infringment on our core
    patent - the implications are somewhat obvious
  • i would think??

19
2004-2006
  • Now what?
  • Crisscross USA
  • Prepare background information package
  • RFP to top firms
  • Find partner/capital
  • Choose lawyers
  • Sanity checks (patent litigation friends)

20
FILED - EASTERN DISTRICT
  • January March 9, 2007 filed
  • i4i LP (then law changed with EBay)
  • Case always looks best on the first day
  • Discoveries
  • Who what where when why
  • Documents
  • Documents
  • Documents
  • Documents (1 million pages?)

21
JUDGE DAVIS
  • Leonard Davis (judge)
  • Leonard E. Davis (born 1948 in Fort Worth, Texas)
    is a district judge for the United States
    District Court for the Eastern District of
    Texas.1 He was nominated by President George W.
    Bush on January 23, 2002 and was sworn in on May
    15, 2002. He previously served as Chief Justice
    of the Twelfth Court of Appeals of the State of
    Texas and was a practicing civil trial attorney
    in East Texas for 23 years prior to becoming a
    judge.
  • Judge Davis graduated cum laude and first in his
    class from Baylor Law School in 1976 where he was
    Editor-in-Chief of the Baylor Law Review and a
    member of Baylor's interscholastic moot court and
    mock trial teams. He received his undergraduate
    degree in Mathematics from the University of
    Texas at Arlington in 1970, and his Master of
    Management Science Degree from Texas Christian
    University in 1974. He worked as a computer
    programmer and systems analyst prior to entering
    law school in 1974.2
  • He has received an American Jurisprudence Award
    for Excellence in Contracts and Federal Courts.
  • He is primarily assigned patent lawsuits in the
    US district court. 3

22
AND
  • April 19, 2008 Markman Hearing (win/lose)
  • May 11 2009 Trial
  • Team of 30
  • McKool Smith (rapid prep b/c illness)
  • Daily transcripts

23
AND
  • May 19, 2009 Jury Instructions
  • Bankers?
  • Photos
  • witnesses
  • Canadians in Texas
  • Experts

24
May 20, 2009 - 102 PM
  • From Loudon Owen mailtoLOwen_at_mcleanwatson.com
  • Sent Wednesday, May 20, 2009 0102 PM Central
    Standard Time
  • To Thomas L. Crisman
  • Subject
  • Very urgent
  • I don?t know how you deal with this but there is
    a major date problem in the transcript of
  • Judge Davis instructions to the jury. On page
    139-140 his instruction to the jury says
  • ?here are ways that Microsoft can show that a
    claim of the ?449 patent is not new ?if the
  • claimed patented method was known or used by
    other ? before June 14, 2004?
  • This date should be June 14, 1994

25
May 20, 2009 - 235 PM
  • From Thomas L. Crisman tcrisman_at_McKoolSmith.com
  • Sent Wednesday, May 20, 2009 235 PM
  • To Loudon Owen
  • Subject RE
  • We won 200M
  • Tom

26
  • Does that mean youre going to stop shouting at
    me, Gordon

27
THE END
  • July 9, 2009- Post Verdict Motion Hearing
  • August 11, 2009 Final Judgment Permanent
    Injunction
  • - THE END -

28
Twitter, ConanApocalypse Word
29
APPEAL
  • August 11, 2009 Final Judgment Permanent
    Injunction
  • August 18, 2009 MSFT notice of appeal,
    Emergency stay motion
  • August 24, 2009 Amicus Dell, HP
  • Sept 3, 2009 - Stay granted, WLF amicus
  • Sept 23, 2009 Appeal heard in DC
  • Re-examination at same time
  • Dec 22, 2009 Judges Ruling on Appeal

30
AND
  • Dec 22, 2009 Judges Ruling on Appeal
  • Jan 8, 2010 Petition for rehearing
  • Going forward.

31
KEY LESSONS
  • Lifestyle vs. Economic Decision
  • Daily Surprises, uncertainties
  • Reality facing larger opponents
  • Power of Press, NPE
  • Why not infringe?
  • Where are all the Angels? All the Investors?
  • Business is People
  • Patent Enforcement is People

32
  • THE PATENT WORLD

33
MEMO From CEO To Board of Directors We believe
Giant Corporation International is violating our
US patent 7,328,999. We need to take action
immediately. We want to sue, but the risks are
high and we dont have internal expertise. Please
advise what you authorize and recommend ASAP?
Now What Happens?
34
Challenge to Board Member
  • Describe Patents
  • Do you know what they cover?
  • Evidence of Infringement
  • Claims construction analysis vs. infringers
    products
  • Damages Theory
  • Is the potential return worth the risk
  • Strategy
  • Negotiate a license? Litigate? Wait? Ignore?
  • Funding
  • Internal? External? Contingency? Funding
    Expenses? Management Opportunity Cost?
  • Risks
  • Validity challenges What prior art existed at
    the time? Obviousness? Inequitable conduct?
  • Non-infringement
  • Counterclaims from infringers patents
  • Willingness and ability of management and
    inventor to testify
  • Complex patent case decided by non-technical jury
  • Re-examination
  • Legal Landscape
  • Are you current with Supreme Court Decisions,
    precedents, venues, patent reform

35
Value Maximization - Structural Hurdles
  • Asymmetry 1 - Rookie mistakes
  • first time plaintiffs vs. defendants with 100
    cases. Defendants capitalize.
  • Asymmetry 2 - control in lawyers hands
  • Fee clear conflicts of interest
  • Contingency often misaligned under funded
    wide variance in quality and objectives
  • Power shift from principals to intermediaries
  • (Would you ask law firm to manage your sales and
    marketing, RD, or finance?)
  • Asymmetry 3 large defendant vs. small/mid
    sized plaintiff
  • Can turn to advantage IF have capital and
    expertise
  • Plaintiffs often run of out capital later in
    process, when case is strongest nearest to
    realization
  • Expertise, Control Power Asymmetries

36
Unique Dynamics of Patent World
  • Huge industry, immense value importance
  • Complicated specialized
  • Lawyers rule - seasoned executives live in mortal
    fear
  • Large companies manage hundreds of cases versus
    most companies that never enter fray (a 1001
    ratio tilts the field, and owners of key patents
    are often in weak position)
  • Unrealized patent value. Extensive risk value
    arbitrage
  • Despite industry size, massive holes in
    services/expertise capital
  • Global opportunity - US enforcement model poised
    to move overseas

37
Industry Players
  • Patent Aggregators
  • Intellectual Ventures
  • RPX
  • Allied Security Trust
  • Patent Brokers
  • IPotential
  • Intellectual Property Investment Funds
  • Northwater Intellectual Property Fund
  • Altitude Capital Management
  • Patent Licensing/Litigation Companies Funds
  • General Patent Corporation
  • Acacia Technologies
  • Rembrandt Management
  • Public companies with patent licensing business
    models
  • Hedge Funds
  • Fortress
  • Patent Litigators
  • Contingency Patent Litigators
  • Few pure contingency firms

38
Value of a Patent?
  • A very different investment with potential for
    strong, risk adjusted returns uncorrelated to the
    capital markets in an inefficient, poorly
    understood yet very important asset class

39
QA www.i4iLP.com
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