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IP Practices Growing

By wmadministrator

Patent law’s staid, yawn-inducing stereotype has flipped on its head in recent years as economic globalization and other trends have turned many U.S. businesses into producers and stewards of intellectual property that requires vigorous legal protection.

It can be stimulating stuff.

The work is “intriguing and interesting,” said John Salazar, one of Kentucky’s 134 registered patent attorneys (and agents) and head of the intellectual property practice at the Louisville-based Middleton Reutlinger law firm. “I really enjoy it.”

Salazar left an engineering job with IBM nearly two decades ago for law school and patent law after getting a taste of it from the client side of the table. Today he is ranked among the tops in his practice specialty by two legal rating organizations.

“It’s a fun area in which to practice,” said Mandy Decker, who specializes in the life science, or biotech, realm of intellectual property practice for Stites & Harbison. “There are a lot of puzzles to solve. It’s a lot of fun to work with a company and their business people and come up with strategies together.”

Patents actually are just one segment of a multifaceted practice specialty that today is referred to generally as intellectual property, which requires special certification. Beyond the standard bar exam, there is a another testing process for admission to practice before the U.S. Patent and Trade Office (USPTO), which oversees the complex realm of patents, trademarks and copyrights. Those big three are the foundation of IP, but their pursuit, application and defense can get very complicated.

There’s also e-commerce; licensing; media and entertainment law; trade, customs and border protection and much more. Simply obtaining a patent can take years, hence the ubiquitous “patent pending” phraseology.

Patent attorneys are central players in many business operations, an essential part of the mix in product development and launch. The closer a business is to the cutting edge of new technology – such as the state of Kentucky’s push to establish a high-tech life sciences industry by commercializing research from its university – the greater the need for savvy patent practitioners.

An expanding specialty
The field is growing in the commonwealth. Formerly the realm of small boutique practices, today nearly all large firms have IP service groups – sometimes built by buying up or merging with boutiques.

“It may be the biggest growth area in the past 30 years. You can thank the dot.com boom for that,” said Jack Wheat, co-chair of the Intellectual Property Service Group at Stites & Harbison, one of Kentucky’s largest law firm. “All emerging (commercial) fields of the past 30 years have huge IP components.
Years ago, land grants were it. People wanted to own land. Now, people want to own intellectual property.”

Wheat oversees about 30 attorneys. (For a list of all commonwealth patent attorneys and agents, go to oedci.uspto.gov/OEDCI/GeoRegion.jsp and click on Kentucky.) He formerly had his own boutique IP law firm with six lawyers, which merged with Stites & Harbison on Jan. 1, 2000, to launch the firm’s
IP division.

“When I was in law school about 30 years ago, there were about five patent attorneys in Kentucky,” Wheat said, considering the growth of the field. If the commonwealth continues its pursuit of biotech business – “It’s great, clean commerce. It has high-paying jobs,” he notes – the state will need an expanding IP law community to be successful.

At this stage, biotech is not generating much litigation. Its “product” is the research coming out of the University of Louisville and University of Kentucky, which is pure IP whose legal protection creates its financial value. Using the example of a new pharmaceutical preparation, Wheat said, the drug itself is protected by patents, its name by trademark and its marketing materials by copyright.

“We’re trying to build the economy in the commonwealth through the startups that come out of our university,” said James Zanewicz, of the UofL Office of Technology Development. “The intellectual property is all that they have when they start. Unless you have strong legal IP protections when you come out, you can’t get venture capital to invest in those companies and give them the cash flow they need to grow and develop.”

Zanewicz is an IP lawyer admitted to practice before the Kentucky Bar and the USPTO. UofL hired him in 2000 to create the office he runs.

Marketplace values patents
All innovation involves ideas, but to capitalize on a great idea it must be shepherded to market then guarded and defended. Companies and corporations also seek to differentiate themselves in mature but still competitive industries by coming up with unique combinations of existing products or manners of service – resulting sometimes in a product that exists purely as intellectual property.

A patent is a serious arrow in a salesperson’s quiver.

“It helps when the sales person is able to say this feature set is patented and protected,” Salazar said, which means most businesses recognize the importance of their IP portfolio. They invest amply to expand their portfolio and strengthen their market position.

Salazar cites his former employer IBM.

“They’ve historically been a big IP company,” he said. Last year alone, IBM received 4,100 patents, Salazar said. “They recognize the importance of patents to protect software and hardware … and expend large amounts of capital to protect those assets.”

Getting a patent application on file with the USPTO costs typically around $10,000, according to Decker. It’s common to spend another $10,000 to “prosecute” the application and obtain the patent, often a five- to seven-year process.

Patents grant the holder a form of property right to prevent others from making, using, selling or importing the subject invention for the term of the patent, usually 20 years. They must be maintained and/or renewed, at a cost, and they can be sold or licensed like other property.

Each country has its own IP law peculiarities, requiring special legal attention, but the international Patent Cooperation Treaty streamlines the process for those participating in foreign commerce and trade.

The multiple modes and options for IP protection mean the serious business must craft a strategy and put it in place before it enters the marketplace. It can even precede the invention itself. Shaping the legal IP strategy and portfolio is a never-ending process at large companies.

Figuring out how to maximize protections and help clients “is something I tremendously enjoy,” Salazar said. His work includes IP consulting on bringing new products to market, shaping strategies to improve a company’s competitiveness and determining where future research and development should go. Salazar has noticed a shift in recent years from manufacturing-centered portfolio management to a research and design focus.

Manufacturing portfolio management has changed as more and more product manufacturing takes place abroad in China especially but many other countries, too.

“When you ship all these product designs to China, the last thing you want to see is your competitor come out with a similar product made by the same manufacturer,” Salazar said. But problems can flow both ways. “The reverse has happened. Clients go to a Chinese manufacturer seeking a product and get one, but it is their competitor’s product.”

Foreign patents filings are a common practice for Kentucky IP lawyers, but enforcement actions are not, he said. It’s all part of the portfolio management equation, which has nearly limitless variations.

Strategy in the U.S. market is the primary focus. It’s the biggest, most lucrative, most important and highly regulated. Patent protection, Wheat said, was written into the original U.S. Constitution: Article 1, Section 8, Clause 8. (England’s Parliament put patent protection in place in 1624 while Medieval commerce power Venice enacted rights in 1474.)

Building an IP infrastructure
For the academic community, the modern landmark was 1980’s Bayh-Dole Act, which authorized private patent protection for research conducted with government funding. A crucial step in getting life-saving and -improving innovation from the lab to the marketplace, Bayh-Dole created the incentive to undertake commercialization of research.

UK’s intellectual property office came along a few years later, and UofL’s several years after that, Decker said. Kentucky is building an economic IP infrastructure, she said, not only a community of state patent lawyers but IP accountants, etc. It takes time – like Wheat and Salazar, Decker said the example of other Kentucky patent lawyers whose footsteps she could follow in was nearly nonexistent – but the commonwealth is finally attracting IP businesses rather than seeing them depart for better environs.

“There were not a lot of people in Kentucky who could service the life sciences,” Decker said.

The commonwealth’s “Golden Triangle” – Louisville-Lexington-Northern Kentucky, where the bulk of the state’s business takes place – is just getting off the starting line compared to North Carolina’s long-established Raleigh-Durham-Chapel Hill Research Triangle, Decker said, but Kentucky is at least getting some of its native biotech businesses to come back home. And that’s important progress.

“You can see things indicating that we have a rosy future,” Decker said. “I’ll be excited to see how it unfolds.”