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FOR IMMEDIATE RELEASE Contact: Al Rickard, 703-402-9713 or arickard@associationvision.com LES Annual Meeting Explores Licensing Trends in Key Industry Sectors Incoming President Allen Baum Focuses on "Change" In Speech to Record Attendance of 1,500 NEW YORK, NY, SEPTEMBER 15, 2006 - The latest intellectual property (IP) licensing trends in key sectors such as the pharmaceutical industry, high technology, and chemicals/energy were among the many topics explored at the Licensing Executives Society (LES) 2006 Annual Meeting, held September 10-14, 2006, in New York City. The meeting drew a record attendance of more than 1,500 executives. Ted Leonsis, vice chairman of AOL, highlighted the opening day of the meeting with a speech entitled, "Shift Happens," where he outlined his view of the rapidly changing world of the Internet. Leonsis described three "wallets" that consumers and licensing executives deal with - these wallets contain money, time, and pixels (information on the Internet). He argued that pixels have become "the new coin of the realm," and this new reality will drive how companies structure their Internet operations. "Consumers want choice and control," Leonsis observed, "and today there is an expectation that everything on the Internet will be free." In contrast to the old "top down" media structure, he noted that today's world is "bottom up" with thousands of Web sites providing information that people use. "This is a world marked by 'coopetition,'" Leonsis said. "We will license to them, and they will license to us. "Is it a good thing to license something to you and not get any money back?," he asked. "Are the pixels I will get back worth it?" These are the questions that Leonsis believes will be asked in the future. He added that online advertising will be the payoff for Internet companies that can attract the most pixels. "There are a lot of dollars flowing through this, and it is not going to stop for a long, long time," he predicted. At the opening day plenary session, a panel of investment bankers and venture capitalists discussed how intangible assets such as intellectual property are valued. The following day, the plenary session focused on "Flexibility, Innovation, and Tenacity," and included insightful comments and case studies from a panel of venture capitalists and corporate executives. Former Senator Birch Bayh, who introduced and secured passage of the Bayh-Dole Act more than 20 years ago, gave an impassioned appeal to licensing executives to not let opponents of current licensing laws "turn back the clock." "The Bayh-Dole Act today is under increasing attack," he charged, noting that "naysayers have no appreciation for the motivations behind the act and don't understand the economics behind it." The Act was passed into law in 1980 and allows universities to hold patent rights to inventions and innovations developed using government funding and license them out so they can be developed and used in society. Before the law was enacted, government-funded innovations were patented by the government and never licensed to companies that could develop them, leading to a huge technological and productivity disadvantage for the United States compared to other nations. "It didn't make sense for the government to invest millions of dollars in research with no return on investment," Bayh said. "Without patent protection, business and industry will not invest money to bring inventions to market." These issues have been solved through the Bayh-Dole act, but Bayh is wary of today's critics of the law, who he described as "small in number but very zealous in their views. We should not deny them the right to speak, but we need to speak on our own views if we are to carry the day. These critics are intelligent and well-intentioned, but they are wrong." He cited statistics from the Association of University Technology Managers that demonstrates a very strong track record of universities creating new products and companies as a result of their research now that they have the ability to own and license patents. "The process is alive and well and functioning properly," Bayh said. He noted that inventions such as the nicotine patch, three-dimensional surgery techniques, and nutraceutical products are just a few examples of the advances made possible under the law. On the final day of the meeting, LES President Dwight Olson passed on the gavel to 2006-07 President Allen Baum. In his acceptance speech, Baum thanked the many people who helped him serve LES and rise to the top leadership position. He also related some of his personal experience with LES and how it has helped him. "Over the years, I got the things I expected from LES - networking and education," he said. "However, it was the unexpected things that caught me by surprise. I started to realize that almost every deal I was involved with included someone on the other side who I know through LES. This familiarity became an asset because we were able to cut to the chase and get deals done. The connectivity we get from LES is good for us as licensing professionals and it is good for our employers and clients that want us to get deals done." For the coming year, Baum announced a theme of "Change." "I chose this them because there are tremendous forces of change in play right now," he said. "These forces will affect license negotiations and the bAllence of power between licensor and licensee. New licensing models are already cropping up. "Once in a great while, the pendulum swings and things change. This is one of those times. The last the time the pendulum swung in a major way was 1982, and we got the Court of Appeals for the Federal Circuit, which hears appeals in all patent cases. The result of that swing of the pendulum is that patents became much stronger - some say too strong. As a result, companies are filing more patent applications than ever and the U.S. Patent and Trademark Office is bursting at the seams. Some argue that patent quality has suffered as a result, leading to more litigation." Baum observed that publicly traded companies with business plans centered around patent collection and enforcement have sprung up, forcing many companies to pay "huge sums of money to license asserted patents." He also noted that a record number of patent cases are pending before the U.S. Supreme Court. To top it off, he added that "the most extensive changes to U.S. patent laws since adoption of the patent act in 1952 are pending before Congress, and the patent office is poised to adopt extremely significant rule changes." All this has led to unprecedented awareness in the media and elsewhere of intellectual property licensing issues. "My personal hope in all of this is that we don't overreact and squelch innovation in the process," Baum cautioned. "Patent protection has fueled investment in new technology and enabled the United States - and LES professionals - to lead the world in the commercialization of new technologies. "As a professional society, a core mission of LES is to keep its members plugged in to what these changes are and how they will affect our professional endeavors." To that end, Baum said that LES will focus on carrying out its strategic plan of enhancing its educational offerings, partnering with its international partner organizations, and promoting volunteer opportunities to access the talent and experience of its members. In recognition of its accomplishment during the past four decades, LES also introduced its 40th Anniversary book at the meeting. # # #
About Licensing Executives Society (U.S.A. and Canada), Inc.
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