Lawyers say companies are taking a more aggressive attitude in protecting intellectual property. And law firms are boosting their IP practices in response.
“For a lot of companies their major asset is one or more pieces of IP,” said Todd Gordinier, a partner at Newport Beach law firm Stradling, Yocca, Carlson & Rauth, which boosted its IP lawyers by four to 10 last year. “Whether the economy is up, down or sideways, they need to protect it to protect their future.”
Medical device maker Edwards Lifesciences Inc. recently settled a patent infringement suit with St. Paul, Minn.-based St. Jude Medical Inc. “We are committed to protecting the interests of Edwards and our clinician-inventor partners, with whom we work to create new technologies for the treatment of advanced cardiovascular disease,” said Edwards Chief Executive Michael Mussallem.
Irvine-based Edwards initially went after St. Jude in 2000 claiming it violated some heart valve repair and replacement patents Edwards held. Under terms of the settlement, Edwards will receive a one-time cash payment of $5.5 million and St. Jude will receive paid-up licenses for some of its heart valve products.
Some companies use IP litigation to not only protect market share, but grow it, said Peter Gluck, an attorney at the Costa Mesa office of Miami law firm Greenberg Traurig LLP. Gluck formerly was chief intellectual property counsel at Advanced Medical Optics Inc., a Santa Ana-based spinoff of Irvine-based Allergan Inc.
“When companies see an economic upturn coming six to eight months down the road, they’ll start to invest in IP to differentiate themselves from the pack,” Gluck said. “What I’ve seen in the past six months is a huge upswing in the number of litigation cases filed to enforce patents by companies that are getting ready to expand their business.”
Irvine-based Broadcom Corp. has been an active protector,and buyer,of patents.
Last February the company bought a portfolio of chip patents from Austin, Texas-based Cirrus Logic Inc. It then sued rival Agere Systems Inc. for allegedly violating several Cirrus Logic patents. The patents cover how data are stored and accessed on magnetic and optical drives.
The lawsuit marked a shift in Broadcom’s legal strategy.
In the past two years, a more conciliatory Broadcom had settled a series of legal disputes, including big fights with Intel Corp. and Microtune Inc. of Plano, Texas.
Meanwhile, Broadcom has been building up its own patent portfolio with the Cirrus Logic deal and others. Former chief executive Alan E. “Lanny” Ross previously said he sought to buy companies and patents as a defense strategy against rivals looking to take Broadcom to court.
In the Agere case, Broadcom is using its patents in an offensive play.
“Broadcom will aggressively protect its intellectual property and will pursue strategies that most effectively accomplish that goal,” said Broadcom spokesman Bill Blanning, in a previous interview. “While litigation is not the preferred approach, we will sue to protect our IP if necessary.”
Philadelphia-based Lavin, Coleman, O’Neill, Ricci, Finarelli & Gray is representing Broadcom in the Agere suits.
Another reason for the general IP boost: globalization.
“Ten or 15 years ago, if you had a product, it would take years for competition to arise even if you didn’t have a patent. Now it can take weeks or even days,” said Robert Fish, head of the IP group at Costa Mesa-based Rutan & Tucker LLP. “One company official I know went to Asia to talk to a manufacturer about his product. By the time he got back here he already was seeing knockoff of his product advertised here in the U.S. Rutan has IP attorneys.”
Legal sources say the rise in IP work marks a shift in historical patterns. Lawyers said IP work, and litigation in general, tended to rise when the economy took a hit and fall when things were booming.
“I’m not sure you can count on the old cycles anymore,” said James Bear, managing partner at Irvine IP law firm Knobbe, Martens, Olson & Bear LLP. “I think the double whammy of the dot-com meltdown and Sept. 11 seemed to change all the rules.”
Now companies are looking to enforce patents all the time.
“Even though the dot-com bubble burst, (earlier growth) increased the overall mix of technology companies in the economy, including here in OC,” said Steven Hanle, an IP partner with Stradling, Yocca. “Generally speaking, when the economy is up companies are innovating and they’re acquiring IP and enforcing IP to gain market share or to create new markets. When the economy is down, companies are enforcing IP to protect existing market share.”
The Irvine office of Washington, D.C.-based law firm Crowell & Moring LLP has gone from zero to eight IP lawyers in OC in the past year. The firm now counts 27 attorneys in all here. It expects IP work to continue to grow.
“Intellectual talent wants to move here, especially people who grew up and went to school in places like La Jolla, San Diego and Santa Barbara,” said Scott Feldman, a partner and chief litigator with Crowell’s Irvine operations. “They want to come to OC to live and start businesses and that drives demand for legal services like IP.”
And it’s not just IP work that’s booming. Lawyers say general litigation work also is on an upswing.
Tom Salinger, head of the 40-attorney litigation department at Rutan, said courts now handle lawsuits more efficiently than in the past thanks to the state’s “fast-track” system.
“It used to be the case that the litigator had 20 to 30 cases, but only four or five of them would be active,the rest would sit on the backburner,” Salinger said. “Now with fast track you have to bring a case to trial within a year of filing. That limits the number of cases you can handle.”
