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The United States Patent Utility™ Subscription platform unlocks the value of patents December 4, 2014 Prepared for Prepared by ipCapital Group 426 Industrial Avenue Suite 150 Williston, VT 05495 802.859.7800 www.ipcg.com

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Page 1: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The United States Patent Utility™

Subscription platform unlocks the value of patents

 December  4,  2014  

Prepared  for   Prepared  by  

ipCapital  Group  426  Industrial  Avenue  •  Suite  150  •  Williston,  VT  05495  

802.859.7800  •  www.ipcg.com    

Page 2: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The U.S. Patent Utility™ Investor Summary

1.  Patent  ProperLes  recently  launched  The  United  States  Patent  ULlity  –  PlaOorm  model  offers  an  entry  level  patent  plan  for  businesses  of  all  sizes,  on  monthly  subscripLon  basis  –  Includes  licenses  to  targeted  patents,  legal  support,  and  valuable  informaLon  services    

2.  Problem:  Patented  technologies  are  now  ubiquitous,  but  most  companies  struggle  to  understand  the  associated  risks  and  opportuniLes  –  For  all  but  the  largest  companies,  it  is  difficult  to  access  new  innovaLons,  moneLze  patent  porOolios,  manage  legal  

risks,  obtain  useful  patent  informaLon  –  The  need  for  a  viable  patent  market  is  increasing,  due  to  the  central  role  of  patented  technology  in  the  U.S.  

economy  and  the  rising  costs  of  exisLng  market  inefficiencies  –  230k+  U.S.  businesses  are  acutely  affected,  represenLng  a  iniLal  market  opportunity  of  $3.3  billion  

   3.  SoluLon:  The  U.S.  Patent  ULlity    provides  a  cohesive  service  plaOorm  to  unlock  patent  value  

–  Connects  companies  &  inventors  for  mutual  benefit:  generates  revenue,  opportuniLes,  and  reduces  risk  –  InnovaLve  plaOorm  soluLon  uses  Big  Data  analyLcs  &  no  fault  licenses  to  create  market  for  licensing  transacLons  

4.  This  soluLon  is  coming  at  the  right  Lme,  backed  by  the  right  team  –  Jay  Walker  &  Jon  Ellenthal  -­‐  core  team  has  patent  savvy,  experience  in  scalable  enterprise  (Priceline,  Synapse,  

Walker  Digital)  –  Uses  elements  of  exisLng  successful  business  models,  e.g.  Priceline  (unlocking  perishable  inventory),  Synapse  

(innovaLve  subscripLon  plaOorm)  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   2  

Page 3: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The U.S. Patent Utility™ Investor Summary

1.  Patent  ProperLes  recently  launched  The  United  States  Patent  ULlity  –  PlaOorm  model  offers  an  entry  level  patent  plan  for  businesses  of  all  sizes,  on  monthly  subscripLon  basis  –  Includes  licenses  to  targeted  patents,  legal  support,  and  valuable  informaLon  services    

2.  Problem:  Patented  technologies  are  now  ubiquitous,  but  most  companies  struggle  to  understand  the  associated  risks  and  opportuniLes  –  For  all  but  the  largest  companies,  it  is  difficult  to  access  new  innovaLons,  moneLze  patent  porOolios,  manage  legal  

risks,  obtain  useful  patent  informaLon  –  The  need  for  a  viable  patent  market  is  increasing,  due  to  the  central  role  of  patented  technology  in  the  U.S.  

economy  and  the  rising  costs  of  exisLng  market  inefficiencies  –  230k+  U.S.  businesses  are  acutely  affected,  represenLng  a  iniLal  market  opportunity  of  $3.3  billion  

   3.  SoluLon:  The  U.S.  Patent  ULlity    provides  a  cohesive  service  plaOorm  to  unlock  patent  value  

–  Connects  companies  &  inventors  for  mutual  benefit:  generates  revenue,  opportuniLes,  and  reduces  risk  –  InnovaLve  plaOorm  soluLon  uses  Big  Data  analyLcs  &  no  fault  licenses  to  create  market  for  licensing  transacLons  

4.  This  soluLon  is  coming  at  the  right  Lme,  backed  by  the  right  team  –  Jay  Walker  &  Jon  Ellenthal  -­‐  core  team  has  patent  savvy,  experience  in  scalable  enterprise  (Priceline,  Synapse,  

Walker  Digital)  –  Uses  elements  of  exisLng  successful  business  models,  e.g.  Priceline  (unlocking  perishable  inventory),  Synapse  

(innovaLve  subscripLon  plaOorm)  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   3  

Page 4: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

•  The  U.S.  Patent  System  exists  to  encourage  innovaLon  &  commercializaLon  •  Inventors  are  granted  transferable  patent  rights  in  exchange  for  disclosing  their  invenLon  •  U.S.  economy  depends  on  collecLve  ability  to  invent  and  use  invenLons  commercially  •  Patents  are  massively  underuLlized  asset  -­‐  $1T  in  annual  waste  by  U.S.  firms,  according  to  Forrester  Research  

•  However,  most  companies  and  organizaLons  are  lef  out  of  patent  acLvity,  parLcularly  licensing  •  Patent  licenses  are  currently  transacted  in  small  groups  via  liLgaLon-­‐based  processes  –  expensive  and  inefficient  •  Only  very  large  companies  have  the  financial  resources  and  legal  experLse  to  navigate  these  transacLons  •  No  affordable  way  for  small  and  mid-­‐sized  firms  to  find  criLcal  informaLon  about  patents  •  Most  patents  lack  sufficient  value  to  jusLfy  today’s  transacLon  costs,  so  are  stuck  on  commercial  sidelines  

 •  As  a  result,  the  vast  majority  of  organizaLons  are  not  strategic  in  managing  patents,  missing  out  on  valuable  opportuniLes  and  vulnerable  to  increased  risk  

                 

Inefficiencies in Current Patent System Process not scalable; largest companies dominate

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   4  

Sources:  USPTO,  AUTM,  Qualcomm  10K.  Uses  2012  data  for  parity.  

…  only  5%  of  patents  generate  revenue  $50  billion  market  for  U.S.  patent  licensing,    dominated  by  large  companies  e.g.    

95%  generate  no  revenue  Unknown  potenGal  market  size  

Of  the  2.3  million  ac<ve  U.S.  patents…  

Page 5: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The Problem is Growing Need for an entry level solution is increasing

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   5  

More  than  500k  patents  filed  per  year  in  the  U.S.  •  Patented  technology  is  increasingly  ubiquitous  (overlapping,  across  supply  chain)  

•  Economy  ever  more  dependent  on  intangible  assets,  including  patents  

•  Global  compeLLon  intensifies  need  for  ongoing  improvements  to  products  &  services  

0  

300,000  

600,000  

1993   2003   2013  

Patent  ApplicaLons  Granted  Patents  

Applica<on  /  Grant  Year  

Applica<

on  /  Grant  Volum

e  pe

r  Year  

U.S.  Patents  ApplicaGon  &  Granted  Patent  Volume  

Sources:  USPTO,  AIPLA  

Rising  legal  costs  for  enforcement  and  licensing  •  Using  liLgaLon  as  the  primary  tool  to  force  licensing  is  increasingly  untenable  

•  More  challenging  risk  environment  –  growing  concerns  among  in-­‐house  counsel  

$2.0  

$2.5  

$3.0  

2005   2007   2009   2011   2013  

Million  

Survey  Year  

U.S.  Patent  Infringement  Lawsuits    Average  Legal  Costs  per  Suit  

Page 6: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

Identifying Target Market for The Utility Segmentation by geography, revenue, industry, patent ownership

Geography:  ULlity  iniLally  offered  in  the  United  States  

     

   

 

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   6  

Sources:  PWC,  Innography  meta-­‐data,  Census  NAICS  data  

Do  not  own  patents,    750,000    

Filed  for  1+  patents,    350,000    

U.S.  business  patent  acGvity  AcGve  patents  &  applicaGons  only  

Patent  Ownership  

Annual  Revenue:  

 $100,000      $1,000,000      $10,000,000      $100,000,000      $1,000,000,000      $10,000,000,000    

$5m  -­‐  $1bn  Target   ExisLng  patent  programs  

+  

Small  enLLes  (special  arrangements)  

$  

Top  10  industries  for  patent  infringement  cases,  1995  -­‐  2013  

•  Consumer  Products  (17%  of  cases  in  top  10)  •  Biotechnology  /  Pharma  (14%)  •  Industrial  /  ConstrucLon  (11%)  •  Computer  Hardware  /  Electronics  (10%)  •  Medical  Devices  (9%)  •  Sofware  (7%)  •  Business    &  Consumer  Services  (6%)  •  TelecommunicaLons  (5%)  •  AutomoLve  /  TransportaLon  (5%)  •  Chemical  /  SyntheLc  Materials  (5%)  

Target  Sectors:  Top  10  by  patent  lawsuits  

Page 7: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

U.S.  Companies,  for-­‐profit,  with  10+  employees  

 1,100,000  businesses  

Filed  for  1+  patent    350,000  businesses  

In  target  industries,  with  revenues  between  $5m  -­‐  $1bn  per  year  

 230,000  businesses  

$  

Over 230k Businesses Face High Risk, Miss Opportunities Segmentation by geography, revenue, industry, patent ownership

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   7  

Source:  PWC  Patent  LiGgaGon  Study,  2014;  Census  2011;  Business  Census  2007,  Innography  meta-­‐data  

90,000  businesses  represent  target  market  1  for  The  U.S.  Patent  

ULlity    

140,000  U.S.  businesses  in  target  market  1A  

•  In  target  high  risk  industries  •  Within  revenue  range  

IniLal  addressable  market  230,000  U.S.  businesses  

Page 8: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The Resulting Opportunity for Patent Properties Sizing the initial addressable market of potential Utility subscribers

Number  of  companies  in  target  market  1    (High  risk  industries,  have  filed  for  at  least  1  patent,  U.S.  going  concerns,  full  Gme,  10+  employees,  within  target  revenue  range)  

90,000  

Number  of  companies  in  target  market  1A    (Have  not  filed  for  patents,  otherwise  same  demographics  as  primary  target)  

140,000  

Total  iniLal  addressable  market   230,000  potenLal  subscribers  

Annual  subscripLon  fee  for  U.S.  Patent  ULlity   $14,400  

Es<mated  ini<al  addressable  for  target  industries   $3.3  billion  per  year  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   8  

Page 9: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The U.S. Patent Utility™ Investor Summary

1.  Patent  ProperLes  recently  launched  The  United  States  Patent  ULlity  –  PlaOorm  model  offers  an  entry  level  patent  plan  for  businesses  of  all  sizes,  on  monthly  subscripLon  basis  –  Includes  licenses  to  targeted  patents,  legal  support,  and  valuable  informaLon  services    

2.  Problem:  Patented  technologies  are  now  ubiquitous,  but  most  companies  struggle  to  understand  the  associated  risks  and  opportuniLes  –  For  all  but  the  largest  companies,  it  is  difficult  to  access  new  innovaLons,  moneLze  patent  porOolios,  manage  legal  

risks,  obtain  useful  patent  informaLon  –  The  need  for  a  viable  patent  market  is  increasing,  due  to  the  central  role  of  patented  technology  in  the  U.S.  

economy  and  the  rising  costs  of  exisLng  market  inefficiencies  –  230k+  U.S.  businesses  are  acutely  affected,  represenLng  a  iniLal  market  opportunity  of  $3.3  billion  

   3.  SoluLon:  The  U.S.  Patent  ULlity    provides  a  cohesive  service  plaOorm  to  unlock  patent  value  

–  Connects  companies  &  inventors  for  mutual  benefit:  generates  revenue,  opportuniLes,  and  reduces  risk  –  InnovaLve  plaOorm  soluLon  uses  Big  Data  analyLcs  &  no  fault  licenses  to  create  market  for  licensing  transacLons  

4.  This  soluLon  is  coming  at  the  right  Lme,  backed  by  the  right  team  –  Jay  Walker  &  Jon  Ellenthal  -­‐  core  team  has  patent  savvy,  experience  in  scalable  enterprise  (Priceline,  Synapse,  

Walker  Digital)  –  Uses  elements  of  exisLng  successful  business  models,  e.g.  Priceline  (unlocking  perishable  inventory),  Synapse  

(innovaLve  subscripLon  plaOorm)  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   9  

Page 10: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The U.S. Patent Utility™ Addresses the Problem (1 of 2) Core subscription features, $1,200 per month flat rate

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   10  

Informa<on  Services  

Financial  &  Legal  Services  

•  SemanLc  matching  engine  uses  big  data  to  pair  businesses  with  relevant  patents  •  50  licenses  included  per  subscriber  •  Licenses  to  patents  are  without  implicaLon  of  infringement  •  Subscribers  lisLng  their  patents  in  ULlity’s  licensing  catalog  qualify  for  a  5  year  

licensing  revenue  guarantee  and  an  immediate  advance  •  Startups  and  small  enLLes  can  subscribe  with  deferred  billing  for  2  years    Increases  access  to  innova<on,  reduces  business  risk  and  licensing  revenue  

•  Subscribers  access  detailed  patent  informaLon,  driven  by  3rd  party  and  proprietary  data  •  LiLgaLon  reports  to  assess  risk  environment  •  CompeLtor  reports  to  see  what  new  products  might  be  coming  •  R&D  reports  on  complementary  technologies,  to  improve  products/services  

 Increases  subscriber  insight  into  their  patent  landscape  

•  Semi-­‐annual  review  of  patent  legal  &  compeLLve  environment  with  ULlity-­‐provided  liLgaLon  counsel    

•  Legal  defense  cost  relief  of  up  to  $500,000  •  Annual  discounts  on  new  patent  filing  service  up  to  $25,000    Gives  low-­‐cost  access  to  legal  support  on  patent  issues  

No  Fault  Patent  Licensing  

Page 11: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The U.S. Patent Utility™ Addresses the Problem (2 of 2) No-fault license through data engine is key to establishing viable market

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   11  

Licenses  to  Relevant  Patents  No  Fault  Patent  

License       Patent  owners  

Full  Text  Patents  

 Specs  for  Product  /  Service  

Big  Data  Seman<c  Matching  Engine  

Medium  &  small  businesses,  organizaLons  

$$$  

•  Allows  transacLons  without  implicaLon  of  fault,  eliminaLng  lawsuit  risk  •  Drives  straighOorward  moneLzaLon  of  the  “frozen  95%”  of  patents  •  Enables  increased  access  to  innovaLon  for  businesses,  revenue  for  inventors  

Page 12: The United States Patent Utility™walkerinnovation.com/wp...US_Patent_Utility_120114.pdf · The United States Patent Utility™ Subscription platform unlocks the value of patents!

The U.S. Patent Utility™ Investor Summary

1.  Patent  ProperLes  recently  launched  The  United  States  Patent  ULlity  –  PlaOorm  model  offers  an  entry  level  patent  plan  for  businesses  of  all  sizes,  on  monthly  subscripLon  basis  –  Includes  licenses  to  targeted  patents,  legal  support,  and  valuable  informaLon  services    

2.  Problem:  Patented  technologies  are  now  ubiquitous,  but  most  companies  struggle  to  understand  the  associated  risks  and  opportuniLes  –  For  all  but  the  largest  companies,  it  is  difficult  to  access  new  innovaLons,  moneLze  patent  porOolios,  manage  legal  

risks,  obtain  useful  patent  informaLon  –  The  need  for  a  viable  patent  market  is  increasing,  due  to  the  central  role  of  patented  technology  in  the  U.S.  

economy  and  the  rising  costs  of  exisLng  market  inefficiencies  –  230k+  U.S.  businesses  are  acutely  affected,  represenLng  a  iniLal  market  opportunity  of  $3.3  billion  

   3.  SoluLon:  The  U.S.  Patent  ULlity    provides  a  cohesive  service  plaOorm  to  unlock  patent  value  

–  Connects  companies  &  inventors  for  mutual  benefit:  generates  revenue,  opportuniLes,  and  reduces  risk  –  InnovaLve  plaOorm  soluLon  uses  Big  Data  analyLcs  &  no  fault  licenses  to  create  market  for  licensing  transacLons  

4.  This  soluLon  is  coming  at  the  right  Lme,  backed  by  the  right  team  –  Jay  Walker  &  Jon  Ellenthal  -­‐  core  team  has  patent  savvy,  experience  in  scalable  enterprise  (Priceline,  Synapse,  

Walker  Digital)  –  Uses  elements  of  exisLng  successful  business  models,  e.g.  Priceline  (unlocking  perishable  inventory),  Synapse  

(innovaLve  subscripLon  plaOorm)  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   12  

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Core Leadership Team Expertise in IP and scaling innovative businesses

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   13  

•  Founder:  

 •  Prolific  inventor  with  over  700  patents  

•  CEO:  

•  Previous  CEO:  

Jay  Walker   Jon  Ellenthal  

•  Hands-­‐on  experience  establishing  and  scaling  disrupLve,  market  changing  business  models  

•  Deep  experLse  in  intellectual  property  and  innovaLon  

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Building on Previous Successful Business Model Innovations

Connec<ng  mass-­‐market  user  groups  with  efficient  bundled  licensing    •  Manages  rights  to  over  8.5  million  musical  works  •  Unlike  The  ULlity,  is  not  a  neutral  arbiter  &  will  sue  infringers  (represents  content  owner  rights)  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   14  

Connec<ng  customers  through  new  channels  •  30  million  customers  and  2  billion  pieces  of  

consumer  promoLon  each  year  •  Co-­‐founded  by  Jay  Walker  

Crea<ng  a  marketplace  for  unique,  perishable  products,  benefi<ng  buyers  &  sellers    •  Founded  by  Jay  Walker  in  1997,  now  ~$60  B  

company  

(Direct  markeLng  subsidiary  of                      )        

THE  AMERICAN  SOCIETY  OF  COMPOSERS,  AUTHORS  AND  PUBLISHERS  

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The U.S. Patent Utility™ Investor Summary

1.  Patent  ProperLes  recently  launched  The  United  States  Patent  ULlity  –  PlaOorm  model  offers  an  entry  level  patent  plan  for  businesses  of  all  sizes,  on  monthly  subscripLon  basis  –  Includes  licenses  to  targeted  patents,  legal  support,  and  valuable  informaLon  services    

2.  Problem:  Patented  technologies  are  now  ubiquitous,  but  most  companies  struggle  to  understand  the  associated  risks  and  opportuniLes  –  For  all  but  the  largest  companies,  it  is  difficult  to  access  new  innovaLons,  moneLze  patent  porOolios,  manage  legal  

risks,  obtain  useful  patent  informaLon  –  The  need  for  a  viable  patent  market  is  increasing,  due  to  the  central  role  of  patented  technology  in  the  U.S.  

economy  and  the  rising  costs  of  exisLng  market  inefficiencies  –  230k+  U.S.  businesses  are  acutely  affected,  represenLng  a  iniLal  market  opportunity  of  $3.3  billion  

   3.  SoluLon:  The  U.S.  Patent  ULlity    provides  a  cohesive  service  plaOorm  to  unlock  patent  value  

–  Connects  companies  &  inventors  for  mutual  benefit:  generates  revenue,  opportuniLes,  and  reduces  risk  –  InnovaLve  plaOorm  soluLon  uses  Big  Data  analyLcs  &  no  fault  licenses  to  create  market  for  licensing  transacLons  

4.  This  soluLon  is  coming  at  the  right  Lme,  backed  by  the  right  team  –  Jay  Walker  &  Jon  Ellenthal  -­‐  core  team  has  patent  savvy,  experience  in  scalable  enterprise  (Priceline,  Synapse,  

Walker  Digital)  –  Uses  elements  of  exisLng  successful  business  models,  e.g.  Priceline  (unlocking  perishable  inventory),  Synapse  

(innovaLve  subscripLon  plaOorm)  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   15  

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APPENDIX

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   16  

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Initial Target Market Calculations Geography

Data  descrip<on   Number  of  businesses   Source  

Total  number  of  businesses  in  the  U.S.   5,600,000   U.S.  Census  2011  

Number  of  businesses  fulfilling  demographic  criteria  –  full  Lme,  10+  employees  

1,100,000   U.S.  Census  2011  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   17  

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Initial Target Market Calculations Industry

Sector   Number  of  relevant  businesses   NAICS  codes  used  to  cross-­‐categorize  (de-­‐duplicated)   Source  

Consumer  Products   208,153     31-­‐33,  44-­‐45   U.S.  Census  2011  business  data  by  NAICS  codes    Biotechnology  /  Pharma   13,188   3254,  541711  

Industrial  /  ConstrucLon   107,009     21,  23  

Computer  Hardware  /  Electronics   5,553     334  

Medical  Devices   2,567     3391  

Sofware   10,462     51121,  334611,  541511  

Business  /  Consumer  Services   332,760     51,  54,  56,  61,  71,  81  

AutomoLve  /  TransportaLon   4,734     336  

Chemical  /  SyntheLc  Materials   4,001     325  

TelecommunicaLons   2,503     517  

Total   690,930    

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   18  

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Initial Target Market Calculations Annual Revenue

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$  

Industry   Number  of  businesses  in  target  revenue  range  ($5m  –  $1bn)   Source  

Consumer  Products   112,870     U.S.  Census  2011  business  data  by  NAICS  codes  and  revenue  data    Biotechnology  /  Pharma   2,515    

Industrial  /  ConstrucLon   51,552    

Computer  Hardware  /  Electronics   3,436    

Medical  Devices   929    

Sofware   3,653    

Business  /  Consumer  Services   66,997    

AutomoLve  /  TransportaLon   2,782    

Chemical  /  SyntheLc  Materials   3,137    

TelecommunicaLons   1,247    

Total   258,561  

%  of  businesses  in  target  industries  with  non-­‐target  legal  forms  of  organizaLon  (non-­‐profit,  government)  

10.71%  

Total  businesses  excluding  non-­‐target  LFOs   230,874  

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Initial Target Market Calculations Patent Filing Activity

Number  of  patent  filings   Es<mated  number  of  U.S.  companies   Source  

1-­‐5   265,872    

Metadata  provided  by  Innography  

6-­‐9   40,746    

10-­‐19   21,838    

20-­‐29   7,014    

30-­‐39   3,380    

40-­‐49   1,950    

50+   7,614    

Total   348,414  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   20  

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Initial Target Market Calculations Identifying Target Market

Figure   Source  

A   Number  of  businesses  in  the  U.S.  fulfilling  demographic  criteria  –  full  Lme,  10+  employees   1,100,000  

B   In  10  target  industries   690,930    

C   Within  target  annual  revenue  range  ($5m  –  $1bn)   230,874  

D   %  of  target  businesses  within  revenue  range   33.4%   CalculaLon:  B  /  C  

E   %  of  2012  patents  filed  in  target  industries   78.1%   USPTO  filings  by  NAICS  data  

F   Number  of  U.S.  businesses  who  have  filed  for  at  least  1  patent   348,414   Innography  metadata  

G   Number  of  U.S.  businesses  target  market  1   90,968   CalculaLon:  D  *  E  *  F  

H   Number  of  businesses  in  target  market  1A   140,000   CalculaLon:  C  –  G  

Overall  target  Market   230,000   CalculaLon:  C,  rounded  to  nearest  10k  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   21  

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Sources

•  PWC  –  2014  Patent  LiLgaLon  Study  •  U.S.  Census  –  U.S.  Business  data,  2007,  2011  –  by  revenue  and  NAICS  industry  codes  •  USPTO  –  Patent  filing  volume  data,  patent  filing  by  industry  •  Qualcomm  2013  10K  •  AssociaLon  of  University  Technology  Managers  (AUTM)  –  2013  Licensing  Report  •  American  Intellectual  Property  Law  AssociaLon  –  2013  Report  of  the  Economic  Survey  •  U.S.  Patent  ULlity  product  materials  provided  by  Patent  ProperLes  •  U.S.  business  &  patent  metadata  provided  by  Innography  •  “MoneLzing  the  Rembrandts  in  the  avc”,  Beyers  &  Sobon,  Intellectual  Property  Magazine,  September  2014  •  Company  websites  –  ASCAP,  Synapse,  Patent  ProperLes,  Priceline  

December  4,  2014  ©  2014,  ipCapital  Group,  Inc.  All  Rights  Reserved.  ConfidenLal  and  Proprietary  InformaLon.   22