Recession and Copyright and Patent and Economic Recovery and Trademark and Economy and Law

Intellectual property practices in law firms recovering from recession

February 27, 2010

Intellectual property law practices are beginning to thaw along with so many other areas of the economy.

Companies curtailed patent filings and other intellectual property work in late 2008 as they fought to survive the recession. A year later, the clients began talking about resuming patent and trademark work, and in the past month or so they’ve been following through.

The recovery is small, and it’s weak. But it’s improvement.
 

james coles Coles

A spot check of local law firms suggests a trajectory of IP practices’ experiencing a complete recovery by the end of the year, if not earlier.

Echoing peers, Jim Coles, who heads the intellectual property practice at Bose McKinney & Evans LLP, said, “Companies can’t afford to not be innovative for very long.”

Indeed, other lawyers wish they had the problems of their intellectual property counterparts.

Intellectual property work typically sails through downturns because companies recognize they need to continue research and development and then protect those inventions in order to thrive in the long term. No products to sell means no profits.

This recession, though, was so deep that it even clipped IP practices.
 

daniel boots Boots

Coles said patent filings fell roughly 10 percent at Bose McKinney. One lawyer was laid off, not because the lawyer was incompetent but because the person struggled to generate business.

Dan Lueders, a partner at Woodard Emhardt Moriarty McNett & Henry LLP, which specializes strictly in IP, wouldn’t discuss business activity except to say rates weren’t cut and lawyers were not laid off. A handful of clerical staff and paralegals were let go, and some positions vacated through attrition weren’t filled.

Bingham McHale LLP had no layoffs, but Dan Boots, senior partner in its Intellectual Property & Technology Practice Group, said the workload was noticeably lighter.

Boots attributed nearly half the slowdown to clients’ being snapped up by Fortune 100 companies.

The slowdown hit local law firms at a couple of levels.
 

dan lueders Lueders

Clients cut back severely on patenting incremental improvements because the potential to profit from the improvements was so meager. Although some of those minor improvements are showing up in law offices again, others may never reappear.

Other patents were delayed to help companies save money and hit profit targets. Most of the patents trickling into law offices involve delayed projects.

Still other work moving into the practices is new.

Early activity is mixed even within specific industries. Automotive is still slow at Bingham McHale but gaining traction at Woodard Emhardt, for instance.

Coles of Bose McKinney suspects companies are continuing to save money on patents by publishing articles about their advancements in obscure trade publications where the discoveries are on record but competitors aren’t likely to notice.

The “prior art” strategy allows a company to avoid costs of filing a patent and the resulting tip-off to competitors, while also allowing the company to continue reaping profits from the invention.

When competitors inevitably find out about the invention, whether through reading the article or discovering it on their own, the article serves as evidence the original company thought of the idea first.

That prevents the competitor from patenting the idea. Once the idea is discovered by others, everyone can use it. But the original company reaps profits while the secret lasts and keeps someone else from locking it away as their own patent.

Coles said it’s difficult to know how many companies rely on prior art because they don’t need law firms to submit an article to a trade publication. But the strategy likely is popular due to its low cost.

The future is brightening considerably for intellectual property practices.

Bingham McHale’s Boots said venture capitalists and university technology transfer programs are starting to become active again: “There are people who are finally pulling the trigger on things.”

Business at Bingham McHale’s intellectual property practice will return to normal before the end of the year, Boots predicted.

Coles anticipates a recovery by year-end, and said Bose McKinney has been looking for a year to replace the laid-off attorney.

Lueders of Woodard Emhardt also anticipates recovery by the end of the year.

However, the firm has no plans to backfill the laid-off workers.

“We’ve probably sized our staff where it should have been all along,” Lueders said.•

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