Patent Attorneys Leave Firms for NPEs


OK it’s Super Bowl season so forgive the football picture but are some top patent litigators switching sides?

An article by the Wall Street Journal describes the transition of two patent attorneys who left incredibly lucrative careers representing some of the biggest companies in the world to work for nonpracticing entities:

As recently as three years ago, the two lawyers were among a small group of elite attorneys used by U.S. companies to defend their patents in courtrooms.

Mr. Desmarais was a lawyer for such companies as International Business Machines Corp., GlaxoSmithKline PLC, Boston Scientific Corp., Alcatel-Lucent SA and Verizon Wireless. The clients of Mr. Powers included Cisco Systems Inc., Merck & Co., MicrosoftCorp., Oracle Corp., Samsung Electronics Co., and Apple Inc.

But in the last couple of years, both men have turned about-face. They have created practices to represent not the largest, most tech-savvy companies, but to work for patent-holding plaintiffs known as “nonpracticing entities,” or what some critics call “patent trolls.”

Mr. Desmarais  in late 2009 left behind a several-million-dollar partnership draw at Kirkland & Ellis LLP to start a company and several months later, a new law firm. Last summer, Mr. Powers cast aside a $5 million draw as a partner at Weil Gotshal & Manges LLP to start his own firm.

These attorneys recognized that patent holders yield a different kind of power when they decide to work offensively. Instead of waiting for a potential infringement action to bring a patent out of its portfolio, patent trolls can eliminate the hassle of a patent infringement claim and instead use their patent holding as leverage to produce lucrative licensing agreements. Of course, “patent troll” is not traditionally a complementary term for nonpracticing entities:

Critics of nonpracticing entities say that because they license and sue but don’t innovate, they do more to drain the U.S. economy than they do to help it.

“There’s no question that NPEs are legal, but whether they represent good public policy, well, that’s another question entirely,” says John Palfrey, an intellectual-property professor at Harvard Law School. “There are plenty of examples of NPEs that don’t add any value to anything but do add enormous transaction costs.”

Nevertheless, unless the courts or Congress restrict nonpracticing entities, which neither seems eager to do, many patent-law experts think the industry will continue to grow—and attract more top-flight lawyers.

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