LES Standards Committee Charter Document

LES Standards Committee Charter Document Intellectual Property (IP) Valuation Standards Committee

3 April 2017

The core function of the Intellectual Property (IP) Valuation Committee is to create industry-wide standards for businesses engaged in the practice of valuing IP, including patents, trade secrets, and copyrights, or using IP valuations in commerce. These standards will serve to:

 Establish a standard framework for conducting IP valuation engagements.

 Improve the practice of IP valuation.

 Establish a consistent framework and method of evaluation and reporting that produces IP valuation reports that courts, government entities, and other third parties can utilize to admit or accept in an objective form.

 Increase the public acceptance and credibility of IP valuation reports.

By identifying durable and flexible IP valuation methods, the standards will preserve and enhance the function IP valuations serve while maintaining objectivity and compliance with current and future rules, regulations and laws. Specifically, the business practice standards will include requirements for ethical conduct in IP valuation development and reporting and industry-accepted business practices.

These standards apply specifically to businesses that regularly engage in producing, reviewing, or consuming IP valuation reports. The focus of the standards will be on due diligence, valuation modeling, and valuation reporting behaviors and practices applied uniformly across the industry.

Type of Standard

The committee envisions the primary standards document to follow a formal accreditation process compliant with ANSI guidelines. One of the first tasks of the committee is to define phrases like “certification” and “accreditation”; for example, an entity may become certified through the adoption of the standards into corporate policy but may need to go through a full audit before it can become accredited. Accreditation will follow a binary model on a pass/fail basis as assessed by a third party, possibly such as LES or ANSI.

Work Products:

1) The primary work product will be a document outlining the specific steps and guidelines an IP valuation must follow in order to achieve certification or accreditation (see Type of Standard above). Categories of behavioral or business practice standards may include:

 Valuation modeling methods

 Valuation reporting requirements

2) While the primary goal is to address the consistent development and production of IP valuation reports, the committee also envisions the creation of a discrete set of uniform document templates to supplement the standards and provide models for organizations conducting IP valuations. These templates may include the following documents.

 Due diligence checklists

 Valuation model templates

 Valuation report templates

 Exemplary case studies

Appendix A below contains a full draft list of potential standard agreement templates. These agreements will be assigned to Committees or a newly collected working Subcommittee.

3) The committee also envisions a suite of documents describing the standards and the certification or accreditation process, with instructions for all relevant parties involved in the process.

Timeline

Steps Date Charter draft completed 15 April 2017 Committee recruitment finalized First draft of the standard published to the committee for review Initial comments from the committee submitted to committee or subcommittee leadership for review Second draft of the standard published to the committee for review Final comments from the committee submitted to the committee or subcommittee leadership for review Committee voting on the draft standard

© LES USA & Canada Patent Valuation Standards Page 2 LES Standards Committee Charter Document Submission date to the LES USA & Canada board for review Approval by the LES USA & Canada board to submit the draft standard to the general membership for comments Publication of the draft standard to the general membership for comment Submission of comments to the draft standard by the general membership complete Review of general membership comments by the committee Publication of general membership comments and the publication of the committee’s response Submission of the final draft standard to the LES USA & Canada board for review and approval to publish the draft standard for general membership voting Publication of the draft standard for general membership voting Voting complete Publication of the new LES standard

Structure of the Committee

The committee will have a chair, vice-chair, and secretary, which will be voted on and approved by the larger committee, as well as advisors from both LES and ANSI. The committee envisions having member participation throughout the process as well as in potential subcommittees, which will be formed and recruited by committee leadership.

Current Committee Leadership

 Mike Pellegrino, Committee Chair

o President, Pellegrino & Associates, LLC, (317)566-8199, [email protected]

 Alex Rehmeier, Committee Vice Chair

o Director, IP Integration, Boeing, (714)896-4849, [email protected]

 Chuck Cruit, Committee Secretary

Committee Recruitment

The committee believes it is critical to recruit a wide and diverse body of IP valuation producers, reviewers, and consumers, LES members and otherwise, to participate in the formation of the standards. Recruitment will be led by Mike Pellegrino, Gauri Prakash-Canjels, and Stan Stephenson.

Membership

The Committee Leadership will participate in the active recruitment of a diverse array of members to assist in the development of the standards. The initial membership should reflect the broad IP valuation community and a variety of key stakeholders. Members may have experience as licensing executives or attorneys, either in an in-house or external capacity. Members may include consumers of IP valuation reports (e.g., for financial reporting purposes, M&A purposes, or litigation purposes). Members may include service providers that prepare valuation reports. Members may include readers of valuation reports who may work at banks or regulatory agencies. Members must be willing to sign up to the LES Standards By-Laws and IP Agreement, as well as an annual membership fee.

Further, The IP Valuation Standards Committee envisions active collaboration and communication across all other active LES committees, potentially in the form of a joint subcommittee (as warranted) formed from members of more than one Committee to jointly develop practices and documents that may be useful to more than a single Committee.

See Appendix A for current committee membership.

Recommend deleting APPENDIX B – STANDARD AGREEMENT TEMPLATES – DRAFT AS OF MARCH 9, 2015

Below is a full draft list of potential standard engagement checklists. Each document is assigned a tentative priority. Next to each document is an indication of the Committee that is likely to lead the primary documentation effort:

Agreement Template Version Engagements Priority Committee

Engagement Contract Certified engagement All Types 1 Joint Subcommittee

Engagement Contract Non-certified engagement All Types 1 Joint Subcommittee

General IP Due Diligence Checklist All Types 1 Joint Subcommittee

Patent Due Diligence Checklist All Types 1 Joint Subcommittee

Market Analysis Checklist All Types 1 Joint Subcommittee

Valuation Model Checklist All Types 1 Joint Subcommittee

Valuation Report Checklist All Types 1 Joint Subcommittee

Valuation Report Template All Types 1 Joint Subcommittee