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San Francisco-In January, Hewlett-Packard Co. rolled out a new business group tasked with turning the company’s 21,000-patent portfolio-a treasure trove of inventions covering everything from printing to computer networking-into a new source of income. Hewlett-Packard (HP) assembled a special legal team to support the new venture, drawing a handful of attorneys from its 300-lawyer legal department. But the Palo Alto, Calif.-based company is also scouting outside its walls for extra talent, hiring a licensing attorney shortly after forming the new business group. And it is currently trying to fill another licensing opening. “We are actively ramping up our out-licensing activity, and it calls for more in-house patent licensing attorneys to meet demand,” said Stephen Fox, vice president and deputy general counsel for intellectual property at HP. After years of belt tightening, corporate legal departments are starting to augment their ranks. Much of the new hiring involves licensing attorneys who handle the intellectual property transactions that keep technology companies ticking. The trend underscores the extent to which businesses are dedicating their in-house legal resources to revenue-generating activities. “One of the purposes of out-licensing is to optimize value on your patent portfolio,” Fox said, “and that’s measured in terms of dollars.” The demand for licensing attorneys also reflects an improving economic climate. Deals that call for licensing know-how are becoming more common. Licensing attorneys are so closely entwined with deal flow that many companies keep their attorney staffing figures close to the vest for fear of telegraphing their strategy and sales forecasts to the competition. According to legal recruiters who work with in-house legal departments, though, demand for licensing attorneys is on the rise. Julie Brush, the co-founder of Solutus Legal Search LLC, said she is conducting up to eight searches for in-house licensing attorneys. By contrast, she was only engaged in two such searches 12 to 18 months ago, and they were “soft” searches, meaning that the companies proceeded very slowly. “There was no pressing need to get somebody on board,” said Brush. Now it appears that the need is there. Scott Dubin, another legal recruiter, reports a similar uptick. And the job openings are not replacements, he notes, but brand new positions. Applied Biosystems Group hired an attorney to fill a newly created technology transactions position last year. Instead of relying on its in-house patent attorneys to pitch in on licensing matters the way the Foster City, Calif., company had traditionally done, Paul Grossman, the vice president of intellectual property, decided that the work required a specialist. For technology companies, the licensing of intellectual property is bread-and-butter legal work. Most prefer to handle the work in-house because of the repetitive nature of the transactions and the intimate knowledge of the business that is required. “Licensing is clearly better done inside,” said Marcia Sterling, Autodesk Inc. senior vice president, general counsel and secretary. “It’s very hard to get an outsider close enough to a particular business unit to really understand.” In April, Sterling hired a part-time attorney whose duties will include licensing, among other things. “We were just a little light-we’ve got a lot going on right now,” said Sterling. “And folks were working too hard.” Software vendors in particular rely on licensing attorneys since every sale is essentially an outbound licensing deal that requires lawyer involvement. As a result, licensing attorneys play an indispensable role in the company’s core business. “When revenues pick up and sales pick up, the first thing that a company wants is a licensing lawyer because they need to service those revenue deals,” said Heather Meeker, a partner at Greenberg Traurig’s East Palo Alto, Calif., office. Unlike general corporate work, said Meeker, “the amount of [licensing] capacity they need is directly related to the amount of sales they’re doing.” Licensing attorneys also play a big role in strategic deals, entering into joint ventures with other businesses and incorporating technology from other companies into their own products. Meanwhile, businesses with extensive research and development capabilities, such as HP, can tap new sources of revenue by licensing their existing patents to other companies. HP will not divulge how much it expects its new intellectual property licensing group to generate in royalties, except to say that the group hopes to show annual increases in revenue. The group will be run as an independent business unit on a profit-and-loss basis, although the lawyers who support the business will continue to be accounted for as an expense. The HP group will be responsible for the so-called mapping and mining of the company’s patent portfolio, identifying the best patents to license and the best potential customers. The licensing attorneys are called into action to evaluate the strength of the patents and to negotiate and draft the deals with outside customers. Thus far, the industry’s hiring of licensing attorneys appears to be more of a gradual buildup than an arms race. Corporate legal departments tend to hire attorneys one by one rather than by bringing on groups of people as law firms often do. And budgets for in-house legal departments are set at the beginning of the year, giving corporations less flexibility to hire staff in response to sudden swings in deal flow. For many companies, a wait-and-see approach is the safest route. Until a business determines that an increase in licensing work is a normal business condition rather than a one-time surge, it’s easier and less risky to offload surplus licensing work to outside counsel. Still, the outlook within many corporate legal departments is upbeat. “I would say that it’s predictable that as the economy picks up, you’ll see corporate legal departments expand a little,” said Autodesk’s Sterling.

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