C O M P A N Y I N T E R V I E W

Company Interview:

Patriot Scientific Corporation (PTSC)

TWST: What is Patriot Scientific Corporation?

Mr. Turley: Patriot Scientific is a high-tech

company outside of San Diego that’s been around

for 20 years. We are a publicly held high-tech company

and like most high-tech firms that are 20 years

old, we have developed a number of different products,

including radar technology, communication

equipment and ISDN technology. More recently the

company developed a 32-bit microprocessor chip

that we sold through the 1990s and in the early part

of this decade. The chip was very innovative and

sold reasonably well; in fact, we still sell the chip to

this day. But something that came out of that chip

development is that we were granted a handful of

patents on some of the technologies that fit into the

chip and, much to our surprise and delight, those

patents turned out to be enormously valuable and

helpful to us and to the market at large.

So, for the last couple of years, since the

summer of 2005, we have been offering those

patents under license to pretty much every chip

and microprocessor company in the world. It’s

been enormously successful for us and in the span

of just two years, we have already licensed 21

companies to our patents and we have a list of literally

more than 300 companies still to go.

TWST: Give us an idea of the overall platform. Is it relying on the one set of technology or is there additional development going on?

Mr. Turley: The patents were granted just

a few years ago during the development of our microprocessor

chip, and they have many years left

to go. The patents expire around 2015, so we’ve

got a long road ahead of us. There is a portfolio of

the patents; that is, we license them as a bundle

rather than having people pick and choose which

of the patents is applicable for their product. We

say, “You know what? Just take the whole bundle

at once and that way your full product line is covered

moving ahead and backward.” So we license

the portfolio of patents and they apply to pretty

much every microprocessor chip made.

It’s pretty boring to list details of a patent but

broadly speaking, they enable technologies to make

the chips run faster, which of course is something

everybody wants to do. The patents also cover ways

to save energy and use less electricity, which, again,

is something everybody wants to do. In our analysis,

we’ve discovered that nearly every chip company

in the world is making use of this technology

and therefore it is an ideal patent licensee.

TWST: You are saying risk of obsolescence is not near term?

Mr. Turley: No. We are not even halfway

through the life of these patents. We are licensing

firms at the rate of about one a month; as I said,

we’ve got 21 licensees so far; companies like Intel

and AMD took licenses early on. Hewlett-Packard

is a licensee. Companies like Casio, Pentax, Fujitsu,

Nikon, Lexmark — the list goes on and on. These

are big companies that are using Patriot Scientific’s

technologies in just about every conceivable type of

product from computers to digital cameras to photocopiers

— it can be almost anything.

TWST: What’s the drag as far as signing companies? Is it simply balancing your esources against the deals to be made? Are there ways to speed up the process? Does it just have its own timing?

Mr. Turley: It’s a little bit of both.

Although we are really happy with the rate at

which we have been signing licenses, of course

we prefer it to be faster. With 300 plus companies

still to go, I’m going to die an old man before I

can sign all of them at this rate. So having said

that, we are happy with the rate, but I would prefer

it to be quicker.

The drag initially was that people just

didn’t realize that they were using technology.

There is fair amount of education involved in

showing people that, “gee, you are using this

technology, you’ve put it in your products and

they are working very well, but golly, we invented

this a few years ago,” and we so we offer

them an opportunity to purchase the patent portfolio.

There is some initial resistance up front

simply because people are not aware. We think

that awareness is going to pick up and we have

some evidence that the license rate is increasing.

Now that companies like Sony, AMD, Intel,

Hewlett-Packard and the others are taking licenses,

it’s becoming clear to everybody else

that it is something they are going to need to do

in order to continue to innovate their own products.