By Michael Petro, originally published in Buffalo Business First on April 3, 2017.
IP practice, patent litigation essential for big firms
Robert Simpson knows what it’s like to practice intellectual property at both a fullservice firm and a boutique law office.
He started practicing IP law 30 years ago with a smaller Buffalo firm and then moved on to a larger firm before opening his own law office, which he and his wife, Ellen, have run since 1998.
When he started in the late 1980s, there were a number of IP boutique firms here but a decade later, when large firms took notice of the need to provide this service to clients and the lucrative nature of patent litigation, the landscape began to change. Large firms started to acquire and absorb the boutique firms. During that time, he joined the former Jaeckle Fleischmann & Mugel.
Today, Simpson & Simpson is one of only a few IP boutique firms left in Buffalo. He sees his firm as nimble and quick, offering clients flexibility in terms of service and pricing models.
“That has both its challenges and opportunities,” said Simpson, who teaches patent law at the University at Buffalo School of Law. “Being one of only two partners in a small firm, I only need to get one OK if we want to do something out of the ordinary or special. I don’t need to go to an executive committee or management committee for approval.”
Today, firms such as Phillips Lytle, Barclay Damon and Harter Secrest & Emery have IP practices where attorneys across various offices work on patents, trademarks and copyrights, as well as patent litigation.
Approximately 9.9 million U.S. patents have been issued since the U.S. Patent and Trademark Office opened in 1789. There are 600,000 patent applications filed every year, with a fairly equal split by U.S. citizens or companies and foreign entities. More than 200,000 patents are issued every year.
It’s an exciting time to practice this type of law, said Brendan Lillis, senior associate at Phillips Lytle. He said the IP practice is thriving, which allows him to manage client portfolios throughout the world for major organizations. He also works with smaller local companies including startups. The firm sees growth in the practice from the technology sector, he added.
Lillis’ passion for the work was ignited after growing up in a family-owned business and then owning a small business himself. He earned a technology degree in computer engineering, which sharpened his focus on IP law.
“It’s rapidly growing in the sense that almost all companies realize the value of intellectual property,” he said. “They may not have paid as much attention to it in the past but are becoming more educated to its value, and the firm is certainly playing a role in that.”
At Barclay Damon, rather than divide the firm by offices, attorneys work in practice groups, one of which is intellectual property. Each practice group operates as a firm within the firm, with a management structure, budgets and rules. This group is divided into three areas: patents, branding and trademarks, and patent litigation. There are 25 to 30 attorneys and other professionals in the group, including patent agents, in offices in Buffalo, Rochester, Syracuse, Albany and Boston.
Denis Sullivan, IP practice group leader, said all types of companies are represented — big and small, international and local. Larger ones include General Electric, Johnson & Johnson and ITT Technical Institute for patents; Subaru and Nikon for trademarks; and for patent litigation, Baxter Healthcare and Belden Wire & Cable Products.
“The fact that we cover all aspects of IP is extremely useful to clients who come to us thinking they might only have a patent issue (but) we’re able to identify trademark or branding issues,” Sullivan said. “So we’re kind of a one-stop shop for IP.”
Other practice groups such as corporate, commercial litigation, and labor and employment often represent clients with IP issues, he said. The IP practice is actually a driving force at the firm, he added.
“It’s not just servicing the needs of the firm’s corporate clients; we’re a sophisticated practice that has our own business,” Sullivan said.
The practice at Harter Secrest & Emery covers every aspect of IP, including enforcing or defending in litigation against others that might be threatening clients with infringement or misappropriation. It also includes transferring IP by license or sale when a company has an idea to develop and enters into a sponsor research agreement with a university or other entity.
Partner Rowland Richards said Harter Secrest relies on the resources and capabilities of the growing Buffalo office, which has three IP attorneys, as well as five IP attorneys from Rochester.
He has seen an increase in IP exposure as more companies and individuals become part of the global marketplace.
“We’re excited to be part of a big group,” Richards said. “That’s a great amount of resources to draw upon, because we’re not that far away from each other. In today’s world, you can really operate as one unit.”
Though he is part of a boutique firm, Simpson handles IP for larger corporate clients. But while much of his work comes from these companies, the largest being from Europe and Silicon Valley, he has a soft spot for smaller entities.
“I love to talk to and help independent inventors and entrepreneurs. To me, that’s the most fun,” he said.
The practice has seen its ups and downs, he said, but downtime typically occurs when corporations bring the work in-house.
With Buffalo’s renaissance and an uptick in the startup scene, there is additional IP work to be had but it is not yet freely flowing, he said. For many startups, protecting IP can be expensive so it presents a roadblock. Simpson encouraged colleagues to extend discounts and incentives.
“All of us in the practice need to do more to foster entrepreneurs and independent inventors in Western New York, and I think we’re starting to see that happen,” he said. “I think what my colleagues in the Patent Bar should do is cut these people a break.”
Breaking down the numbers:
According to Richards, there usually are more filings on the patent side because a business or individual could lose their rights if they don’t file. Patents require action in a timely manner to give the client the ability to exclude others. In 2016, the firm filed 102 patents and obtained 47.
“If you don’t and you commercialize, you can lose your ability to get that exclusive right,” he said.
There are two types of patents: utility and design. Richards sees increased recognition that design patents can have value. He said they protect the ornamental aspects of the project and are easier and less expensive to obtain. An example is the Samsung vs Apple case, where U.S. Supreme Court overturned a verdict of a lower court that had forced Samsung to pay nearly $400 million in damages for violating three of Apple’s design patents on the iPhone’s shape and colorful icons.
The Supreme Court ordered the lower court to decide if only components were infringed upon, not the entire product, which would reduce the damages.
On the trademark and copyright side, registration offers certain advantages when it comes to garnering damages in litigation. But rights in this area are the result of using the mark, so registration is not always necessary, Richards said.
In addition, registering a copyright isn’t difficult so some clients decide to do it on their own.
According to Lillis, Phillips Lytle handles lots of patent work but nearly every company with which it works has trademarks that must be protected, so that’s a focus of the practice. In 2016 the firm filed 154 trademarks and registered 131.
Lillis said he works heavily on the licensing side when companies look to market and sell their technology. Certain companies are more about patent and trademark protection while others focus on technology trade secrets.
“If we file twice as many or half as many patents next year as we did this year, we’re not going to bat an eye because we know the decisions were made in the best interest of the companies we’re working with at the time,” he said. “If a situation calls for a trade-secret arrangement, as opposed to filing a patent application, then that’s what we’ll advise.”
The IP practice at Simpson & Simpson consists of about 70 percent patent work, 29 percent trademark and 1 percent copyright, according to Robert Simpson. Still, he considers the trademark practice managed by his wife as active. It involves clearing marks for a company’s use, registering and enforcing them in the patent office and, when needed, in courts.
The firm filed 98 patents and 61 trademarks in 2016.
Barclay Damon’s IP practice maintains about 5,000 trademarks for clients but is a little heavier on the patent side — 177 patents were filed throughout the entire practice in 2016, according to Sullivan. Much of the work comes from foreign-based attorneys and entities.
As a predominantly Upstate firm, Barclay Damon can offer them a more attractive pricing model, he said. In the end, most of the group’s revenue is generated from patent litigation, a driving force in the practice.