Yet2.com Inc, 2009 Page 1 Making the Most of Your Intellectual Property.

yet2.com Inc, 2009 Page 1

Making the Most of Your

Intellectual Property


yet2.com – Global leader in intellectual property (IP) licensing, acquisition and consulting Formed in ’99. Advisory Board includes: AGFA, Avery

Dennison, Bayer, DSM, DuPont, Philips, P&G, Takeda

Full range of services to assist clients in licensing and technology acquisition

Offices in Boston, London, Tokyo

yet2.com internet presence is unique resource to facilitate deals –

– 100,000+ registered users

– Network of 10,000+ smaller companies ($10-500m)

Completed 35 deals with clients in last 2 years


Leading members


Lawrence Bickers (BT), Bill Heming (Caterpillar), Bob Hirsch (DuPont), Ruud Peters (Philips), Jeff Weedman (P&G)- Industry Panel Discussion

Sponsors:

Executives from the Following Companies Attended Recent

yet2.com Executive Briefings: 3M; ABB Ricerca S.p.A; Acushnet Company; Agfa-Gevaert; AKZO-Nobel; Argus Insights; Asahi Glass; Asahi Kasei; Aventis CropSciencei BAE Systems; Battelle; Baxter Healthcare; Bayer AG; BP Amoco Chemicals; British Telecom; Caterpillar; Centro Ricerche FIAT; CERN; Ciba Specialty Chemicals; Clariant Corporation; DERA; DLR; DSM; DuPont; Eastman Chemical Company; EPRI; Epson; ESTEC; F. Hoffman-La Roche Ltd.; Firmenich SA; Ford Global Technologies; France Telecom; GE Industrial Systems; General Mills; Halliburton; Hitachi Chemical Co., Ltd; Hitachi, Ltd.; Honeywell; Hyundai Heavy Industries Co., Ltd.; Ingenieurs Conseils en Brevets SA; JRA Technology Ltd; Kao Corporation; Kimberly-Clark Corporation; Kyoto University; L'Oreal; Lubrizol; Lucent Technologies; MG Engineering; Zimmer AG; Michelin; Mitsubishi Heavy Industries; Nippon Steel Corporation; Nomura Research Institute; NTT Leasing Co. Ltd; NTT-AT; Philips; Polaroid; Porsche AG; Procter & Gamble; Reebok; Rhodia; Rockwell Technologies; Samsung Electronics Co.; Schott Glass; Sequa Corporation; Sharp Corporation; Shell Global Solutions; Siemens AG; Singapore EDB; SK Corporation; Sonera Corporation; SONY Corporation

yet2.com: Relationship-based global network

Next Conference: Sep 29 – Oct 1, 2009, Boston, MA

Driving Open Innovation: DealmakingKeynote Speakers:Jeff Weedman (VP EBD, P&G)Hiro Uchida (former exec, Sony)Kevin Mulvaney (former President, DRI/McGraw Hill)Chuck Munns (retired Navy Vice-Admiral)Cheryl Perkins (former CIO, Kimberly Clark)Zia Yusuf (EVP, OI, SAP)


yet2.com: Relationship-based global network

yet2.com partners in virtually all technical centers world-wide


yet2.com services

Technology Acquisition / Open Innovation

Technology Licensing

– Platforms for non-strategic applications

– Leading edge innovations from SMEs

Technology and Needs Identification / Prioritization

Patent Trading

– Private sales of non-core patent portfolios

– Anonymous acquisition of strategic patents


yet2.com and Open Innovation

We’ve worked with 8,000+ buyers of technology– Key success determinants (structure, culture, incentives, etc)

Conducted 300+ proactive searches on behalf of technology acquirers– How to maintain anonymity

– How to maximize valuable responses, and filter out non-valuable ones

Access to the processes of most of the F500– 1 yr ago – only 3-5 really serious companies

– Today – all our clients are moving to OI models (Asia moving most quickly)


yet2.com’s Scouting Service Growing

50% of yet2.com’s services

~125 current searches

Rolling out new ‘Quick-turns’ searching service


yet2.com services - Needs Identification and Prioritization

BU2BU3BU4BU5

BU1

0

5

10

15

20

25

30

35

40

45

50

0 10 20 30 40 50

Financial

Urg

ency

Need#1

DisposeBest

Formed

Eliminate

ReplaceAlternative

Radiate

Improved

Natural

DevEliminate

Replacement

PackagingNeed#16Need#24Need#33

Best(other)

Highest priority needs

‘Apples to apples’ comparison – enabling prioritizing across the company

Our Marketing Approach

yet2.com employs multiple channels to make connections:

Broadcast channels

yet2.com Marketplace, email communications

Syndication partners and Broker relationships

Direct ‘Rolodex’ channels

yet2.com competencies database

Relationships borne of over 5000 introductions between buyers and sellers (corporate, SME, University, Research, VC)

External expert network and literature searches

yet2.com Marketplace

Technology Acquisition Methodology

Key Activities: Understand client’s objectives

Understand market and available technologies

Understand partnering requirements

Document marketing description and project objectives (for both internal & external use)

Promote using yet2.com marketplace and direct email

Search the network (competencies database, entrepreneurs, brokers, VCs, universities)

Find offerings fitting initial criteria

Find companies and filter results against criteria

Gather additional information based on client’s evaluation criteria

Update market and technology understanding

Refine target criteria and continue search

Engage key targets with in-depth discussions

Clarify mutual contributions and benefits; position relative value-add

Client Define strategic objectives

Define initial search and partner criteria

Respond as questions arise

Evaluate preliminary info

Prioritize

Review and evaluation

Refine criteria Confirm next

steps

Participate in initial discussions

Evaluate most promising alternatives

Understand Find Filter EngageUnderstand Find Filter Engage

Technology Licensing Methodology

Key Activities: Conduct technology / market debrief

Interview market experts

Identify potential markets and applications

Collect market data (size / growth, IP landscape)

Prioritization

Identify list of targets

Develop and validate business model and licensing approach

Prepare materials for presentation and evaluation

Online marketing through yet2.com

Offline marketing to target companies identified in the Mktg / Licensing Strategy

Qualification of interested companies

Initial discussions

Moderation of initial meetings

Clarify buyer’s key motivations

Vet contract drafts Lend licensing

expertise to overcome hurdles

Assist in pricing Internal due

diligence support

Deliverables: Agreed articulation of overall competitive advantage

Prioritized list of applications / markets

For each Prioritymarket / application: Prioritized target

list “Packaging” Value proposition

to key targets

Initial discussions with qualified target companies

Completed deals

Market Assessment

Marketing/ Licensing Strategy

Active Marketing

Deal FacilitationMarket

Assessment

Marketing/ Licensing Strategy

Active Marketing

Deal Facilitation


Market Areas of yet2.com Strength

2004 / 2005 2006 2007 2008

OLEDs

Transdermal

Heat Sinks

Woundcare

DNA Hybridizat’n

Filtration

Food Self-heating

Inhalation

Noninvasive

Biosensors

Food Packaging

Anti-fouling

Energy Conversion

Location-based

RFID

Topical Drug Delivery

Clean/Green

Natural Ingredients

Grinding

Solar

Barrier films

Lasers

Motors/compressors

Fermentation

Gasification

OLEDs

Wipes

Antimicrobials


Hot Area # Buyers / Sellers

Buyers Overview Sellers Overview

Clean ‘Green’

6 buyers; 11 sellers.

2 Deals recently completed.

2006: “+2%” 2007: “+20%” Reducing emission of volatiles, replace need for hexavalent chromium Energy saving Biodegradable From sustainable sources

Thermal diffusion coating Low VOC: reduced molecular weight (ie, with silicone); remove outgases (ie, via vacuum distillation); water-based recyclable/renewable: animal cellulose, aliphatically aromatic copolyesters, fermentation of plant sugars and (renewable/edible) oils.Note NOT biodegradable into plastics recycling streams

Materials & ‘Green’ Chemistry ‘buying’ interest


3 example technologies:

Food-grade biodegradable anti-microbial/preservative, made of citrus-based bioflavonoids, organic acids and water

Polymer-based plant growth medium, easily recyclable (vs. rockwool). Adaptable to sustainable/biodegradable when cost profiles reach tipping point

CVR Manufacturing Biodegradable / compostable plastic alternative

Materials & ‘Green’ Chemistry


Results: Completed Agreements


Examples of Recent Deals Closed

Acquisition – Patent: yet2.com represents anonymous F500 in electronics patent auction

Acquisition – Technology: yet2.com finds technology for ultra thin-deposition on flexible substrates, for a F500 consumer products company, from a NA small-co.

Patent Sale: Wireless IR Networking Technology sold for JPBE (US merchant bank)

Strategic Out-License: Diffraction Based Biosensor from Kimberly-Clark to SME Axela Biosensors. (Product commercialized in 8 mos)

Each room can support its own infrared optical segment without reducing bandwidth due to interference caused by other wireless networks in other rooms.

- wireless access point or antenna

radio waves interfering with other wireless antennas

infrared waves contained within room

RF Network

Infrared Network

Signals from other RF wireless networks in nearby rooms reduce the effective data throughput of each individual room network.


yet2.com links Ganeden BioTech to DSM

Ganeden BioTech

Developer of a highly efficacious probiotic (microbial digestional aid), which is sold through retail drug stores and supermarkets and can be incorporated into foods and beverages

DSM

Holds leading positions in the Nutrition sector, particularly the markets for ingredients for human and animal nutrition and health and personal care

PurposeMay enable many new probiotic applications in both food and feed that DSM wants to follow closely as an area of potential future business

Deal SizeDSM joined a private equity partner in a $12 million financing round

Date November 2007

HIGHLIGHTS SINCE TRANSACTION

• Ganeden products were featured on Oprah Winfrey’s syndicated radio program in November (as a result of an introduction from rede4).

• DSM evaluating possible future partnering with Ganeden for the development of specific applications

HIGHLIGHTS SINCE TRANSACTION

yet2.com Inc, 2008 Page 20 yet2.com Inc, 2009 Page 20

ElectroPetroleum (EPI) developed a technology to extract heavy oil. 2/3 of the world’s oil supplies are heavy oil, so this technology has broad implications. The technology uses 1,000 watts of DC electricity to heat the oil and ‘cold crack’ it. The technology competes favorably with steam and an AC technology. Field tests showed a 10 times improvement in oil output per well at a cost of $4 per barrel.

October 2007 - EPI retained yet2.com to find partners and capital.

July 2008 - Yet2.com got 3 term sheets for investment and closed a $10 million round from DFJ Element. Yet2.com also sourced the first customer, Deloro, who gave EPI 10% of a 63 million barrel field.

Yet2.com links ElectroPetroleum to Customers and Raises $10 Million


IP-based Spin-out: NaturNorth auction

NaturNorthSubsidiary of Potlatch – maker of IP-protected bioactive birch bark-derived materials for pharma, ag, cosmetics, paints. Derived from birch bark

BuyerSmall Pharma company in clinical trials for a new formulation with a NaturNorth derivative as a key ingredient

PurposeCouldn’t afford to switch/re-qualify supplier in the midst of Phase III trials, and greatly strengthened their monopoly through acquisition of 30-patent portfolio

Deal SizeWinning auction bid was [7-figures], with several other bidders lined up ot buy non-critical patent families for [6-7 figures]

Date February 2008

R1

R2

R3

R4

And, a Library of ~1000 DerivativesOuter bark +

unique chemistries yield pure Betulin


Patent Acquisition deal Anonymous Bid in Patent AuctionAnonymous Bid in Patent Auction

- The Client: F500 company, which has just learned that a software company is about to auction off a very relevant patent portfolio.

- Worst-case outcome: The Client’s name and bidding information could be leaked to some other winner. In such a case, the winner (even possibly one of the patent trolls) could later approach the Client.

- Why yet2.com: Based on trust built over several years (through successful licensing negotiations both for the Client and on the other side of the table), Client asks yet2.com to bid/negotiate anonymously on its behalf.

- Negotiation – success!: Throughout the auction, yet2.com advised the client on negotiating strategy, and then very carefully executed that strategy. Including successfully maneuvering with the auctioneer for exclusive negotiation period. As a result, the patent portfolio was purchased at half the price of the Client’s budget.

- Anonymity: The Client remained anonymous throughout, right until the actual signing of the definitive agreement.


Artificial Soil Technology License – DuPont / 6062

yet2.com Links 6062 Holdings LLC and DuPont Central Research & Development in Artificial Soil Licensing Agreement

23 August 2005 6062 Holdings LLC, of Beachwood, Ohio, has licensed patents for an artificial biodegradable soil technology from DuPont Central Research & Development (CR&D). The agreement grants an exclusive global license to further develop and commercialize this DuPont technology.

yet2.com Inc. brought the two parties together five months ago when DuPont CR&D posted information about this available technology on the yet2.com website. 6062 Holdings LLC noticed and responded with interest.

The technology provides the optimum balance of water and gases necessary to sustain higher rates of plant growth through the use of in-ground bio-degradable polymer fiber balls. The fiber balls also reduce shipping and handling costs because they are lighter than the soil plants that are currently shipped. The fiber balls can also be watered from below, as opposed to being sprayed from above as traditional soils require. The fiber balls retain 30 to 50 times their weight in water, and need less than half the amount of water required in soils.


January 11, 2006 – Axela Biosensors has completed a significant exclusive in-licensing agreement with Kimberly-Clark. The agreement includes exclusive rights to approximately 150 world-wide patents and applications, as well as transfer of significant immunodiagnostics assay technology. As part of the agreement, K-C will be acquiring an equity interest in Axela. “These technologies are are a significant contribution towards our execution of product offerings in the diagnostic market, including our Diffractive Optics Technology (DOT™) products planned for product launch in 2006” said Rocky Ganske, CEO, Axela Biosensors.

Yet2.com links Axela Biosensors Inc. and Kimberly-Clark on biosensors deal

August 2006: Axela launches new real-time analytical device (8 months from deal).


Appendix

Why use yet2.com?

YOUR NETWORK:

-Suppliers

-Select university relationships

-Conferences/trade shows

-Industry journals

OUR NETWORK:

-Geographically broad

-Solutions from other industries

-Direct access to a large population of SMEs

-Broad reach to universities/research institutions

-Connect through private equity

-Network of affiliated brokers

Both networks important, but will yield different responses


Portfolio Mining / Gaps

Analysis

Deals • Anonymity / IP shield, Lead Qualification,

Call facilitation, Due diligence, Contract and negotiation support

Needs Identification • Gather priority needs -

from R&D, Marketing, etc

• Prioritize • Build or buy

yet2.com Membership and Technology Acquisition Process – Marketing High Priority Needs

Understand Find Filter PartnerEngage

• Understandclient’s objectives

• Understand the market and available technologies

• Understand partnering requirements

• Document TechNeed and objectives for the project (for external & internal use)

• Promote using yet2.com marketplace, TMR, direct e-mail

• Search the network (VCs, universities, entrepreneurs, innovators) and public data

• Find companies and technologies fitting initial criteria

• Interviewcompanies and filter results against criteria

• Gather additional information per client’s evaluation criteria

• Update market and technology understanding

• Refine target criteria and continue search

• Engage key targets with in-depth discussions

• Clarify mutual contributions and benefits; position relative value-add

• Perform due-diligence on management, technology, finances, business model, competitive advantage

• Structurepartnership proposals

• Participate in negotiations

Ou

r S

erv

ices

Clie

nt

• Define strategic objectives

• Define partner criteria

• Respond as questions arise

• Evaluate preliminary info

• Prioritize

• Review and Evaluation

• Refine criteria

• Confirm next steps

• Participate in initial discussions

• Engage in full discussions, evaluations, negotiations

• Confirm yet2.cominvolvement

Months 1-3

High Value Cases TechNeeds


High Value Cases – standard project plan

Bi-Weekly TeamConference Calls

u u u u u u

TeamMeeting

Executive Summary

Month 3Meet with team leaders forProject One

Find, interview, deliver

Produce, reviewand approve specification

Execute search

Month 1 Month 2


yet2.com – leadership and lead consultants

Phil Stern (co-founder), CEO– Leads yet2.com’s Assessment practice. Harvard MBA with prior strategic and management

experience at Polaroid, McKinsey, and Bain

Ben DuPont (co-founder), President– Leads yet2.com’s Connecting services. Prior experience at DuPont, including licensing

numerous Lycra® technologies. Material sciences background

Tim Bernstein, COO– Leads yet2.com’s Deal-Making practice. Stanford MBA, with prior startup and IP experience,

including Masters Thesis on University licensing

Hideyuki Fujii, Director, Asia– Prior consulting experience with Bain, Nippon Polaroid K.K., and Reebok Japan

Emma Hughes, Director, Europe– Extensive European connections

Eugene Buff, VP, Consulting (M.D., Ph.D., genetics)

– Extensive experience in technology acquisition and technology out-licensing projects

Tracey Dodenhoff, VP– Entrepreneurial background, including founding and funding technology companies


Best Practices: Counteracting the corporate immune response

Companies setting aside funds to acquire early stage technologies for R&D-funded searches– even requiring that certain monies go only to externally-sourced

technologies.

Later stage technologies aimed toward BUs and near term product launches – overcoming the immune response remains uncharted territory

Many companies taking advantage of R&D-downsizing system shocks to shift focus toward external-sourcing

Want Find Get Manage

Enabling theenvironment

Articulating the needs

Managing the process

Organizingfor success


Best Practices:Managing the process





Prioritizing needs – Some companies shifting from team consensus to BU-leadership-

centralized prioritizing

– Critical to start with a list of the needs being sought by the BUs, even if the list is not well-vetted or prioritized

• Ideally includes what is NOT of interest

Evaluating responses – The team doing the searching may have to own the resources for

evaluating responses • search integrated into the BU; OR,• scouting team have dedicated technical review resources


Best Practices:Organizing for Success

Employ Top-Down support– Give job promotions to open innovation visionaries– Insert external-search stage gates into R&D/product development processes– Command that ‘intel-risk’ cannot be used as a blocking excuse

Employ Bottom-up approach – Focus first on a few BUs more receptive to the concept

Personal risk-taking – Necessary and/or good in order to move companies?

Incentives – Grant ‘attention-focusing’ incentives?

• Just to the scout to the exclusion of other contributors?• Or just integrate w existing internal innovation incentives

Process Metrics – % of new products enabled – simple, measurable – Companies experimenting with incorporating a measure of incremental revenue

generated.





Patent Selling Methodology

Key Activities: Understand client’s objectives

Conduct due diligence on portfolio background

Review portfolio strength

Develop target contact list

Prepare portfolio marketing materials

Promote using direct communications to decision makers at target companies

Interact with buyers to provide due diligence information (confidential)

Develop list of interested bidders

Set bidding process and timing

Solicit and review bids from buyers

Review restrictions and amendments to PPA

Conduct further rounds of bidding, if required

Finalize details of PPA

Assist client in sending necessary documentation

Ensure closing is completed in a timely fashion

Client Disclose encumbrances and title issues

Review target list

Respond as questions arise

Provide draft confidentiality agreement

Provide draft PPA Determine which

bidder is successful based on all criteria

Provide necessary documentation

Edit and execute final documents

Portfolio review

Targetedmarketing

BiddingProcess

ClosingPortfolio review

Targetedmarketing

BiddingProcess

Closing

Patent Acquisition Process Overview

Portfolio clarification

Sellerdisclosure

Buyerevaluation

NegotiationPrice & Terms

Closing

If Buyer approaches seller:

• Buyer provides listing of patents to seller

• Seller confirms whether patents are saleable

If Seller is actively marketing:

• Buyer reviews listing of patents from seller

• Seller completes questionnaire

• yet2.com conducts background interview

• yet2.com reviews publicly available data on portfolio

• Buyer reviews seller disclosure information

• yet2.com facilitates interaction on remaining issues

• Buyer confirms interest and estimates value

• Both parties interact regarding transaction value and structure, reach agreement

• Both parties agree to key terms related to seller retained rights and indemnities in non-binding term sheet

• yet2.com facilitates, buyer remains anonymous

• Buyer provides draft patent assignment agreement (PPA) based on term sheet

• Seller provides specific feedback on PPA

• yet2.com facilitates finalizing agreement

If yet2.com purchasing on client’s behalf:

• yet2.com signs PPA, accepts and reviews documents, makes payment

If Buyer purchasing directly:

• Seller signs PPA

• Buyer signs PPA, accepts and reviews documents, makes payment

Assignmentagreement


Sellerdisclosure

Buyerevaluation


Sellerdisclosure


Buyerevaluation


Sellerdisclosure

Assignmentagreement


Buyerevaluation


Sellerdisclosure

ClosingAssignmentagreement


Buyerevaluation


Sellerdisclosure

DiscoveryStage

IdeaScreen

SecondScreen

Go toDevelopment

Go toTesting

Go toLaunch

Post LaunchReview

ScopingBuild

Business Case DevelopmentTesting andValidation Launch

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Known consumer need;No idea how to solve

yet2 services: Broad Search

Known approach;Don’t want to “reinvent the wheel”

yet2 services: ‘Deep-dive’ Search

Ensure competitive advantage

yet2 services: - Technology Competitive Landscape Review- Specific-component Searches

Development stopped

yet2 services: Out-licensing

yet2.com Integrating with Stage Gate Processes

Yet2.com Inc, 2009 Page 1 Making the Most of Your Intellectual Property.

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