By Michael Canfield, originally published in Buffalo Law Journal, Buffalo Business First on Mar 26, 2018, 6:00am.
BLJ: IP Lawyers Sharpen Focus on Data Privacy
Things are looking up in the realm of intellectual property practice.
“It’s busy,” said Brendan Lillis, senior associate at Phillips Lytle. “The markets seem to be doing well and, by extension, our clients are active in developing new IP or engaging in new vendors. We’re just seeing an overall uptick.”
Many clients had a good year and are reacting to that, he said. And they’re looking to invest in their companies.
One area that has grown in the IP practice is data privacy, according to Lillis.
“Not only are we dealing with incident response when things go bad, we’re also seeing companies be more proactive,” he said. “They’re updating their policies, doing employee training and engaging outside security vendors to come in and help. We assist with many of those.”
Clients who do business in the European Union are preparing for the General Data Protection Regulation, which takes effect May 25. The law essentially spells out the rights that individuals have to their data, Lillis said.
“It’s a different way of looking at things than we generally look at things,” he said. “it’s really individual-centric.”
The regulation says people have rights to request that data be updated or transferred. He said they also have the right to be forgotten and to provide consent for how their data is used.
The general trend in terms of governing individual data is trending toward what the EU is doing, according to Lillis.
“I would not be surprised to see pieces of it eventually come to the States,” he said, “probably at the state level first. Maybe eventually we’ll see something at the federal level, but that’s very hard to predict.”
Jeremy Oczek, a member at Bond Schoeneck & King, identified several IP trends he sees. The first is a drop in “patent troll” lawsuits. That’s when shell companies buy patents that no one is using and then sue the industry that the patent deals with, demanding payment.
“The Apples, the Googles, the Facebooks of the world have been really up in arms about these suits,” he said.
Over the last few years, the number of cases has decreased, Oczek said, mainly due to a change in the law where patent suits can be filed, as well as several Supreme Court cases.
“Gone are the days when you could file a patent lawsuit anywhere,” he said. “The rules are now a bit more limited.”
The drop-off is a good thing because of the impact of patent troll lawsuits on a business, he added.
“It disrupts a business,” he said. “I’ve represented small companies, I’ve represented Fortune 100 companies in these cases, and no matter what sized company, it has an impact because it takes you away from selling projects. It takes you away from research and engineering and there’s an emotional toll in these cases.”
On the flip side, he sees an increase in “copyright troll” suits.
“These range from photograph owners who have gone around and sued media companies to adult film companies that go around and sue individual owners,” Oczek said. “There have been thousands and thousands of these cases over the country the last few years. They have proliferated quite a bit.”
Oftentimes the owner comes in seeking a “nuisance value,” he said, adding that the issues are similar to patent troll cases.
“The client is faced with the hard choice of paying a nominal settlement amount, even though they may have done nothing, or facing the expensive cost of litigation. That’s why these cases are very controversial,” he said.
The internet plays a role in photograph cases and adult film cases, according to Oczek. In the former, the allegation is often that the photo was taken from the internet.
“In adult film cases, someone goes online accessing the adult film and their internet address gets caught and they get sued,” he said.
Adult film company Malibu Media has filed thousands of suits against individual defendants around the country, Oczek said.
“They don’t ask for a ton of money,” he said, noting that many individuals may have a hard time coming up with even a few thousand dollars. “It’s very sensitive for those who are sued. It’s an incredible settlement amount collectively.”
Another trend: patents being challenged after they’re issued. In 2012 the America Invents Act opened up a procedure for patent reviews called inter partes review, which guarantees that patents will be reviewed within a year of being issued.
“There’s been an incredible amount of patents that have been challenged under that patent review,” Oczek said. “A lot of patents have been declared invalid as a result.”
The process has received mixed reviews, he said. Some companies like it but others don’t.
Oczek cited the case of a hedge fund manager who attempted to file inter partes reviews against pharmaceutical corporation patents, hoping to kill the patents. Bass tried to short-sell stock of the companies. If the patents were declared invalid, the stock could tank and he would gain on the short sale.
Inter partes reviews frequently happen to pharmaceutical companies, Oczek said.
“They could spend a decade investing in a drug, getting it passed through the FDA and bringing it to market, and all of a sudden somebody challenges it,” he said.
Technology provides an opportunity for IP attorneys to get into new areas such as blockchain technology and artificial intelligence, said Lillis of Phillips Lytle.
“We’re seeing companies devote resources to these areas, and we’re doing work to help them either protect their ideas or navigate the regulatory spaces,” he said.
In the tech world, there’s always something new and that means it’s important to “keep up on the technology blogs and the headlines on a daily basis,” he said.
Going forward, Lillis said it’s unclear what will happen with such things as blockchain from a regulatory standpoint, but he sees the practice area growing.
“It’s something we’re continuing to follow,” he said. “Certainly the potential is there for the technologies to have an impact on a lot of different areas.”
When Oczek started practicing IP law 18 years ago, most of his clients were local. Now they’re spread all over.
“IP practice is now superseding geography,” he said. “It doesn’t matter as much where you are. Ninety percent of my clients are not in New York state.”