Karen Boyd thought she'd be handling small pieces of big IP cases when she left Fish & Richardson to start her own firm back in 2008. That didn't happen.
Instead, Boyd says she and partner Julie Turner, who'd come from Day Casebeer Madrid & Batchelder, stumbled onto another need they could fill: representing some of the many companies that find themselves rounded up and sued en masse for patent infringement by so-called nonpracticing entities.
These clients aren't the ones with the biggest targets on their backs. So Turner Boyd says it can let the big clients, typically repped by AmLaw 100 firms, do the driving, while they sit in the back. "We saw these multiple defendant cases as a way to get involved in the really big cases representing big companies, but we could do it without having dozens of lawyers," said Boyd.
Her six-lawyer firm is just one example of how newly opened small IP litigation boutiques are finding a niche in a legal marketplace flooded with patent infringement suits brought by nonpracticing entities. Once derided by established tech companies as patent trolls, NPEs -- companies that don't make products but instead extract license income from purchased or assembled patent portfolios -- are flourishing.
Last year NPEs filed more than 600 patent infringement suits -- up 21 percent from 2009 -- against more than 4,000 defendants, according to an analysis done by RPX Corp. And they sued an average of 6.7 defendants per case last year, up from 4.7 defendants per case in 2009, according to RPX.
Some boutiques, like Turner Boyd, are trying to appeal to companies looking for a less expensive, and more nimble, defense. Other small shops are focused on repping the NPEs. A few firms are doing both, but most see a need to pick sides.
"The bigger companies will tell a firm that they don't want it representing NPEs, even in cases they're not involved in," said Robert Barr, executive director of the Berkeley Center for Law and Technology.
Small patent litigation shops like Turner Boyd can claim a lot of advantages over the big firms where their lawyers used to work. They can move quickly, offer more personal service, and are relatively free of client conflicts.
They're also cheaper.
"Companies want leaner, narrower representation at lower costs," said Weil, Gotshal & Manges' IP litigator Edward Reines.
But even with those advantages, the chances of a small firm repping, say, Apple in something like mobile-phone patent litigation are slim.
When James Otteson left Wilson Sonsini to start Agility IP Law, he said he wanted to work for large tech companies. But despite a CV that boasts plenty of big-ticket patent litigation, including for colorful clog-maker Crocs, most clients said they needed to hire a brand-name firm.
Otteson picked up a few defense matters, but nothing that was going to build his practice substantially, he said. So he turned to bringing contingency cases for NPEs.
"A lot of people have a religious zeal about NPEs and think they're evil," Otteson said. "I made the decision when I left Wilson Sonsini that I was going to be agnostic and pursue the best opportunities I could. Because I have to survive."
Otteson is now working on nine patent infringement cases filed by Walker Digital, a Stamford, Conn.-based NPE chaired by Priceline.com founder Jay Walker. In April, the company filed 23 suits in Delaware federal court against more than 100 companies, including Apple, Microsoft and Google.
Walker Digital's strategic patent advisor is another Otteson client, IP Navigation Group. General counsel David Pridham said he works with big and small firms alike, and it's difficult for large firms to move quickly to resolve conflict issues. Agility Law, he says, can. And more importantly, he likes knowing that Otteson will handle his matters personally.
"Knowing who is going to do the work is huge," Pridham said. "The downside is that Agility can't throw 50 lawyers at a case. But we pride ourselves on being streamlined, so that's not something we really care about."
Freitas, Tseng, Baik & Kaufman, launched in April by four Orrick, Herrington & Sutcliffe partners in Menlo Park, Calif., is also courting NPEs, at least for now. The partners had wanted to go after more of that work at Orrick, Robert Freitas said, but conflicts made it difficult.
Freitas says he sees a lot of opportunity in the wave of NPE litigation. "It also looks like fun," he said. "I've been a lawyer for a long time, and I like my job. But for me, there was something appealing about representing plaintiffs."
On April 25, the firm filed a patent infringement case in the Northern District of California for Orinda Intellectual Properties USA Holding Group Inc. The Mountain View, Calif.-based NPE is suing 50 tech companies and retailers including Hewlett-Packard Co., Dell Inc. and Best Buy Co. Inc.
FOLLOWING THEIR LEAD
As it happens, one of the companies named by Freitas' firm in the Orinda suit is Taiwan-based Asustek Computers, which Turner Boyd counts as a client in about 10 multi-defendant patent infringement cases.
Asustek isn't leading the defense in these cases, and doesn't want to. So it doesn't need expensive teams of attorneys from big firms to drive an overarching strategy, Boyd said, but experienced IP lawyers who can work the case efficiently.
For example, when Medio Stream sued Asustek along with Apple, Microsoft and Dell in the Northern District last December, Turner Boyd was hired to follow the lead of Microsoft's much larger team of attorneys from Covington & Burling.
"We don't need to drive the boat," Boyd said. "If you can be smart about it, you can put two or three lawyers on it, and get the case resolved and settled a lot more inexpensively."
She's also noticed that being from a small firm can drive down settlement amounts for her clients. When an NPE calculates a settlement demand, one of the things it will take into account is how much the defendant is likely to spend on defense costs. If the NPE figures a defendant will need to spend $4 million on its defense -- and more if it loses -- it might ask for $3 million.
"But if it's going to cost $1.5M to litigate," Boyd said, "the calculus changes for the defendant, and the plaintiff knows it."
Durie Tangri's model is a bit different. It focuses on defense work and doesn't typically handle cases for NPEs, founding partner Darlyn Durie said. Founded in 2009 with a handful of patent litigation stars from Keker & Van Nest, it now counts Genentech, Guidewire Software and LinkedIn as clients.
The firm isn't focused solely on IP litigation. But Durie said she and her partners see a sweet spot in defending pre-public companies in suits brought both by NPEs and others because they're willing to come up with creative fee arrangements for cash-strapped startups facing bet-the-company patent claims. For one small startup in Silicon Valley, the firm negotiated a flat monthly fee through summary judgment. For another group of defendants, the firm negotiated a flat fee per phase of their litigation.
"We understand the startup mentality, so that seemed like a natural fit for our skill set," Durie said. "One thing we really enjoy is representing these companies where you have to be creative. We think that gives us a real competitive advantage."
Feinberg Day Alberti & Thompson, opened in February with seven lawyers from DLA Piper, isn't choosing sides, and that was a conscious decision, said partner Ian Feinberg. It's handling large and small matters for both plaintiffs and defendants. One of its biggest matters is a smart phone case in the International Trade Commission for Apple Inc., a case several partners were handling while at DLA Piper.
Feinberg said it's getting easier for firms to straddle the front lines in patent battles. Companies are becoming more sophisticated in their views of NPEs, since they themselves are starting to monetize their patent portfolios much like an NPE does. The stigma attached to being an NPE -- to being a patent troll -- is slowly disappearing.
"Who's an NPE? What's an NPE?" Feinberg said. "It gets to be an interesting question."