Intellectual Property Survey Q2_2014 Purpose & Method Purpose: InsideCounsel conducted a QuickPulse survey to gain a deeper understanding of intellectual property rights holders and those responsible for protecting them. Method: Online survey conducted March 20th – May 7th 2014 Sample Recruitment: Email invitations High impact ad units and ROS banner campaign on insidecounsel.com Banner ad placement within InsideCounsel editorial newsletters Confidence Level: 95% 106 usable responses* *Usable: Respondents who selected their primary job function in question #1 as Corporate General Counsel, Business Unit/General Division Counsel, or Deputy General Counsel and selected yes to working in a Fortune 1000 company in question #2. Other Inside Counsel responses in question #1 were reclassified if they met qualifications of the program. The reclassifications were determined by pulling additional data from InsideCounsel database. All other respondents were terminated from the survey, and were not used in tabulation/analysis for this report. Respondent Profile 45.3% Corporate General Counsel 17.0% Business Unit/Division General Counsel Deputy General Counsel 21.7% Other Inside Counsel 16.0% Q1. Which of the following most closely describes your role? (please select one) Base 106 Level of Concern 88% of respondents are very or somewhat concerned about their organization’s intellectual property Very concerned 41.5% Somewhat concerned 46.2% Not concerned 26.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Q.3 How concerned are you about your organization’s intellectual property protection? Base 106 Concern Ranking Very Concerned Somewhat Concerned Not Concerned Copyright infringement 22% 43% 35% Trademark counterfeiting 28% 46% 26% Trade secret theft 39% 21% 39% Patent trolls/NPEs 43% 36% 21% Q4. Please rank your level of concern about your intellectual property rights protection in the following areas: Base 104 4 Preparedness 60.0% 40.0% 66% of respondents indicate their organization is only moderately prepared or not prepared to prevent a significant attack 53.8% 33.7% 20.0% 7.7% 4.8% 0.0% Very well prepared Moderately prepared Moderately unprepared Very unprepared Q5. How prepared is your organization to prevent a significant, material attack on your product, brand, or intellectual property? (please select one) Base 104 Q5. Preparedness Commentary Very well prepared We are constantly vigilant about protecting our brands and enforcing our intellectual property rights. We have devoted significant resources to business, IP and reputation protection. Moderately prepared Moderately unprepared Coordinating between the business teams, who become aware of issues, and the legal teams is challenging in a large corporate environment. Several safeguards are in place and we have a team who has dealt with such issues in the recent past. Need more monitoring capability and management buy in /cash support. Proactive and ongoing steps to monitor patent/IP infringement, however it remains an ongoing concern given the disparity of patent regimes in the world, particularly China where a Chinese company can obtain a design patent on designs which are in the public knowledge in other parts of the world. As a fortune 20 company we've only had one in-house IP attorney for the past 3 years. Very robust IT and data security process that we continue to enhance. We understand it is impossible to build a system that can guarantee no breach. We regularly face such attacks globally. We have systems in place to respond that are ever-vigilant. We are too dependent on hearing of such issues only secondarily through our associates, and we do not have a thorough enough monitoring process to catch issues early. Need more efforts to educate employees about intellectual property We monitor competitive products and watch when employees leave to work for competitors. However, getting business approval for high price litigation remains a challenge. No plan other than to know who to call. My company is very well prepared to prevent a significant, material attack on our product, brand and or intellectual property as many safeguards have been put in place to combat any form of cyber attack We have a staff of intellectual property lawyers vigilant in protecting our brand. We have a process in place to address concerns of IP infringement reactively, but nothing that would be considered proactive. Within the US we are confident that we police the unauthorized us of our IP rigorously. Outside the states, we have less protection There is always room for improvement on processes and procedures. We have a strong IP department, but could always be more proactive. I think we've made significant strides but still have a ways to go. Q6. Please comment on your answer to question 5 {open-ended} “How prepared is your organization to prevent a significant, material attack on your product, brand, or intellectual property?” Base 50 Response Confidence Level Very Confident 51.9% Moderately Confident 42.3% 5.8% Not Confident Q7. Should your organization be the target of a significant, material attack on your product, brand, or intellectual property, how confident are you in your ability to respond and recover quickly? (please select one) Base 104 Q7. Response Confidence Commentary Very confident Moderately confident Because of the safeguards my company has put in place, I am extremely confident that should my organization be the target of a significant, material attack on its product, brand, or intellectual property that we would have no problems responding and recovering quickly. Again, communication is key; having the information provided to legal counsel in a timely manner is challenging. However, I feel that our legal counsel is very knowledgeable and would be able to seek protection. Have experienced team in place and have the resources to deal with it. Depends on the attack but we have prepared for this. History has shown that we can move quickly and effectively when faced with IP threats Fortunately have not had to deal with that issue yet. We have good internal expertise and good experience with registering or marks and responding to ad hoc infringements, but not sure how we would withstand a more organized, intentional, material attack on our brands. IT has security measures in place Getting business approval for high priced litigation is a challenge. Our risk management program is well established and comprehensive. No one can prepare for all contingencies, nor budget for them. We have a 10 yr history of defending our trademarks and patents and are prepared to fight to counter anyone stealing our protected work. The main threat is a competitive one, and we have sufficient IP protection in place (strategic patent protection and sufficient patents for offensive use) that I am moderately confident. However, China concerns me; we are ramping Up our China patent portfolio and have concerns about the Chinese legal system's willingness to be fair and respect those patents and strike down bad patents. We have a strong trademark enforcement program We have extremely competent attorneys on staff and outside counsel who support and defend our brands. We have the necessary processes in place to manage this. We monitor and have resources in place to react. We monitor constantly, and have both in-house and outside counsel expertise. Not confident Again, as an organization our IP practice is significantly overburdened due to lack of bandwidth. I think we have the resources to respond if necessary. Not sure we have preparedness plan in place. Our business is sufficiently diversified. We have people in place who are supposed to take care of this. Q8. Please comment on your answer to question 7 {open-ended} Should your organization be the target of a significant, material attack on your product, brand, or intellectual property, how confident are you in your ability to respond and recover quickly? (please select one) Base 37 Resource Gaps 35.0% 30.0% 77% of respondents feel their organization has resource gaps in awareness, understanding and/or acting on emerging threats 33.0% 26.2% 28.2% 23.3% 25.0% 19.4% 20.0% 15.0% 10.0% 5.0% 0.0% Awareness of Understanding Acting on existing/emerging existing/emerging existing/emerging threats threats threats All of the above None of the above Q9. Where do you feel your organization has resource gaps to prevent and/or respond to an intellectual property attack? (select all that apply) Base 103 IP Valuation Yes 68.9% No 31.1% Q.10 Does your corporation have an accurate valuation of its intellectual property holdings? Base 103 IP Greatest Concerns Global Attacks Again, not so much patent trolls as we are a B-2-B company, but since we are in the life-sciences industry and we are concerned about the emergence of patent trolls in this sector. China remains a concern as we see Chinese companies violating our IP to manufacture and sell the low end of our product lines and sell first in China, but then try to move to other foreign markets. Finally, it is always difficult to make the case for and justify the costs to protect our IP, and this remains a struggle today. Technology Cost Internal Trade secret/data theft in emerging regions and data security. Major concern for a smaller company like ours is the cost of enforcing IP rights. Often the breaches/infringement result in damages that do not justify the incredibly high cost of litigation in this area - so infringers have significantly less incentive to settle Business method patents pose the greatest threats, especially in terms of processes we utilize. Trade secrets are also at risk in a large company with so many employees, but our turnover is not all that great, and we do a good job, in my opinion, of making employees understand the importance of our trade secrets to the company, and the risks to them should they misappropriate or reveal them. Patent troll claims, which can be expensive to defend against. Use of competitive proprietary information by "trusted" independent distributors of our products to roll business to a competitor. Patent trolls and the expense associated with defending those types of cases. Individual leaks -controlling / monitoring hundreds of employees who might be tempted to steal/sell information Enforcement of IP rights against large clients in foreign countries - copying of technology/IP in certain foreign jurisdictions. main exposure thus far has been China. Attacks are constant and global. It is hard to learn of them all. Keeping up with technological changes. Organized, intentional attack on our brands in international jurisdictions (particularly Asia). Protection of our proprietary data and information systems Monitoring global misuse The cloud Recent AIA legislation makes the US atmosphere less patent friendly. IPRs are expensive and Managing the protection of trade secrets from do not act like European oppositions all sorts of threats including BYOD policies. which are simple, less expensive and do not create estoppels. Escalating costs of annuities and expansion of portfolio is leading to accelerating pace of expenses. Threats outside the U.S. Employees handing over information unknowingly Departing employees Q.11 Please comment on areas of greatest concern for you with regard to intellectual property rights protection: {open-ended} Base 49