Without Disruptive Innovation, Many IP Law Firms are Destined to Meet the Same Fate as Buggy Whip Manufacturers

A possible upside to the recent economic downturn is that many previously accepted business models are being revealed as in need of substantial reinvention or even total elimination. The billable hour/leverage law firm model for legal services is one of these increasingly maligned business models, and is now appearing to be in danger of ending up in the dustbin of history. Specifically, even those who benefit handsomely from the billable hour, such as the Cravath firm’s many $ 800 per hour lawyers, now realize the fundamental irrationality of charging a client for time spent instead of value provided. This alone should signal that change is in the air. Notwithstanding the growing conversation about the need for alternative legal service billing methods, I fear that the majority of IP law firms will either try to ignore the desire for change or will respond by offering only incremental modifications to their existing methods of providing legal services to their clients. As someone with considerable experience dealing with IP lawyers, I believe that, unfortunately, the conservative nature of most IP attorneys means that IP firms will likely lag behind in client service innovations. Thus, I am of the opinion that many prestigious and Continue Reading →

Proposal for a Reality-Based Methodology for Measurement of Corporate Intangible Asset Value

In recent years, financial analysts came to believe that intangible asset value forms an increasing aspect of overall corporate value. These experts generally agreed that intangible asset value made up at least 70 % of the total market cap of the average corporation, an increase of an estimated 20 % in 1975. Not surprisingly, however, the recent global economic downturn has resulted in a steep decline in the amount of market cap attributed to intangible assets. Experts now say that the current (market adjusted) corporate value attributable to intangible assets is “less than 50 %.” To someone who has toiled in the trenches of intangible asset protection at both the law firm and corporate levels, the at least 70 % generalization always possessed a sense of being pulled out of the air, as does the new sub-50 % number. I now understand that these values emanated from nothing more than a “guesstimation” of total corporate value that analysts believe should be accorded to an asset class that they do not fully understand. Put simply, analysts understood that corporate intangible asset value should amount to “a whole bunch” and they assigned a suitably large figure to allow calculation of that unknown Continue Reading →

What is an IP Strategist? A Lawyer Who is Not Afraid to Say No

As a self-described “Recovering Patent Lawyer,” I am now effectively an outside observer of the way the patent business is conducted in the law firm practice environment, and how corporate and other clients purchase patent legal services.  In this last year in which I have re-invented myself as an IP Strategist, I have come to firmly believe that the basic patent law firm business model contains a fundamental flaw:  outside patent counsel can make money only when they actually do work for their corporate clients.  As such, there is no value when a patent attorney (or her law firm partners) tells a client that he should not pay you for the attorney’s expertise.  This necessarily sets up a tension between what the best interests of the law firm attorney and those of the corporate client.   I do not wish to be thought of as criticizing the ethics of patent lawyers.  To the contrary, most patent professionals operate within the highest of ethical considerations.  Nonetheless, when one does not obtain payment for saying “no” to a client, it must necessarily follow that even the most ethical persons will lean toward performing work for a client when their livelihood depends on the Continue Reading →

How Asking One Fundamental Business Question Can Reduce Expense and Improve Business Outcome of Patent Litigation

While a majority of companies consider the cost of obtaining patent protection an essential element of the product and technology development process, few of these same organizations favor the prospect of asserting their patent rights against potential infringers. Moreover, no company relishes the prospect of being a defendant in a patent lawsuit. That most do not readily welcome patent litigation is not surprising given that the average cost of large case (i.e., over $25 MM at stake) patent litigation through trial in 2007 was about $5MM per party in 2007. For disposition of smaller cases, the total amount per party was about $1MM in 2004 dollars. Why does it cost so much for a patent owner to assert her patent rights against an alleged infringer? Put simply, patent litigation at its core is an adversarial undertaking in which lawyers typically define the meaning of a successful outcome. In this context, each discovery battle or brief writing episode serves as an essential battle that must be won in the overall patent litigation “war.” The patent litigation process itself can become an end unto itself, and the business interests of the parties become secondary to validation of the party’s legal positions by Continue Reading →

Confessions of a "Recovering Patent Attorney" and Why I Have Joined the Growing Ranks of IP Strategists

I often facetiously refer to myself as a “recovering patent attorney.” This somewhat tongue-in-cheek phrase seems appropriate to my present professional state of mind because, after many years of drafting and prosecuting patents for clients of all sizes and degrees of sophistication, in the end, I became disillusioned with the way the patent business traditionally operates. Too often, I found that the patents I worked so hard (and was paid handsomely) to obtain failed to serve my client’s business needs. In searching for the source of the disconnect between my efforts, the client’s expenditures and the ultimate value of the patent to my client’s business, I realized that those responsible for the client’s business often did not participate adequately in the patenting process. Instead, at many organizations, inventors and patent attorneys served as the gatekeepers for most patent decisions. While the relevant client business unit typically held some say in patenting decisions, at many companies, the process effectively operated within a R&D/patent attorney “silo.” Upon reflection, I found this situation akin to the proverbial “fox guarding the hen house” because those with the most riding on the patenting process i.e., R & D managers and patent attorneys, held de facto Continue Reading →