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A scrappy pair of intellectual property litigators at Orrick, Herrington & Sutcliffe has declared war. Not against each other, of course. Instead, Rodger Sadler and Robert Cote, both of whom work out of Orrick’s New York City office, are out to defeat so-called “patent trolls.” The term generally describes shell companies, which are often run by lawyers, that are formed for no discernible purpose other than to press infringement claims that involve their sole assets, a handful � or more � of questionable patents often purchased at desperation prices from failed entrepreneurs. Emboldened by recent defense victories on behalf of clients such as Universal Instruments, Compal Electronics, Unisys, York International and NCR and fresh from an invigorating conference in Washington, D.C., with their colleagues from the patent bar, Cote and Sadler have been perfecting what they call the “bloody-nose approach” when it comes to dealing with annoying trolls. “We have a strategy. It’s called fighting back,” says Sadler, an Orrick associate who grew up on an eastern Ontario cattle farm and studied chemistry and physics before graduating from the University of Toronto’s law school. “We bloody their nose by working hard in preparing the case for trial with every intention of taking it the distance and thereby kicking some ass,” adds Sadler. And the bottom-line message to other trolls? “We’re not to be messed with.” Cote, an Orrick partner with a background as an electrical engineer and a wicked lacrosse player, is equally vehement when describing a similar strategy as the basis for negotiating favorable settlements with opposing parties. “You build bonds with someone after you basically beat his ass,” says Cote, who � let the record be clear � occasionally serves as plaintiffs’ counsel in patent litigation. The two lawyers are in the thick of a legal phenomenon that, according to a Hildebrandt International survey of in-house counsel, resulted in a 32 percent increase in corporate spending on IP litigation between 2003 and 2004. The boost is due in significant part to plaintiff trolls � which defense lawyers also derisively refer to as patent pirates, predators or just plain vultures. Companies faced with defending themselves against troll-driven infringement claims � and the prospect of spending as much as $4 million and two years’ time in complex litigation � are frequently persuaded to take the path of least resistance by forking over a few hundred thousand dollars as settlement or agreeing to pay royalties. Jay Monahan, vice president and associate general counsel at eBay, the online auction house based in San Jose, referred to such litigation as “an unfortunate cost of doing business” during a recent one-day conference on “trollery,” which was sponsored by the Intellectual Property Owners Association. Following years of litigation in federal court in Virginia, that cost of doing business for Research in Motion, the Ontario-based maker of the ubiquitous BlackBerry wireless e-mail device, amounted to $450 million. That’s how much the company agreed to pay to settle a patent-infringement lawsuit brought by NTP Inc., an intellectual property holding company in Arlington, Virginia. A few weeks after the settlement was announced in March, the U.S. Patent and Trademark Office took a second look at the validity of the five patents in question, rejecting one outright and, according to some observers, strongly indicating that the other four would soon be rejected as well. James Wallace Jr., a partner at Washington, D.C.’s Wiley, Rein & Fielding who represents NTP, says the matter would be appealed � a process that will almost certainly drag on for a few more years and run up more legal fees. According to the National Academy of Sciences, an overburdened Patent Office � where some 3,000 examiners handle 350,000 filings a year, spending an average of 17 to 25 hours in vetting a patent application against “prior art” � has granted far too many overly broad patents, which has led to increased litigation and courtroom logjams. A National Academy survey found that while the Patent Office in recent years has approved 95 percent of applications � compared with 65 percent in Europe and Japan � fully half the U.S. applications were ultimately found to be without merit, whether successfully defended against infringement claims or, as in the BlackBerry case, settled before trial. All of which helps to explain why lawyers from around the country gathered recently in Washington to compare notes and strategies for how best to deal with what some patent defense lawyers describe as “corporate shake-downs.” The zealous are advised to temper their words, however, in view of Peter Detkin’s experience. Detkin, former associate general counsel at Intel Corp., coined the term “patent trolls” after his company was sued for libel in 1999 for using the more incendiary phrase “patent extortionists.” The libel suit was subsequently dismissed. Cote and Sadler, along with other patent lawyers, believe the “troll” label is particularly appropriate given its reference to the miserable fairy tale creatures who live beneath bridges built by others while sustaining themselves by charging tolls for those crossing the bridges. Bruce Berman, the non-lawyer president of Brody Berman Associates, a New York consultant to patent owners, cautions patent defense attorneys not to dismiss all plaintiffs’ attorneys as shakedown artists. “All patent owners have a right to a return on their investment,” says Berman. “Not all asserters are trolls, and certainly not all assertions are improper.” Berman acknowledges, however, that the current climate is certainly hospitable to trolls, at least when measured by the increase in infringement claims. The number of multimillion-dollar patent suits in the United States rose steadily from 1,178 in 1991 to 2,483 in 2001, according to Berman. That number rose to 2,978 in the period that took in 2003 and the first quarter of 2004. “There’s an arms race going on now, with people just grabbing at patents with little regard to their quality,” he says. “They want to stockpile them and cross-license them. In fairness to the patent examiners, it’s very difficult to issue patents that are perfect. It’s expensive to do the scrutiny so they’ll leave it to litigation.” On the other hand, Berman argues that the federal government has come to view the Patent Office as a “profit center” that encourages a steady stream of fees for applications on patents of little more than litigation value. If a given company becomes known to trolls as a settler, he says, that company and others like it “are going to get picked on.” But companies that band together in some fashion may find ways to fend off further litigation harassment, adds Berman. Enter Cote and Sadler, the Orrick pair whose patent defense tactics include reaching out to business competitors of their clients for cooperation in the crucial discovery phase of litigation. “Good people skills are essential,” says Cote. “If people don’t like you, you don’t get in the door. We go to competitors and make it clear that if our client doesn’t win, they’re next on the hit list.” Sadler, it seems, is the one with a particular knack for getting through those doors. “Everybody loves Rodger,” says Cote. “He’s got a disarming way about him.” Cote mentions the many occasions on which Sadler has been permitted to speak freely with present and past employees of a client’s competitor. In addition, Sadler often finds himself playing detective, inspecting outdated computer equipment, visiting antique technology shows and thumbing through the advertising pages of trade publications in search of prior art. And when it comes to nose-to-nose litigation, Cote says there are similarities between his role as a patent counsel who alternates between representing defendants and plaintiffs and his playing days on the lacrosse field. “In lacrosse you learn to do some things lefty and some things righty,” he says. “We’re a lethal combination. Bob is aggressive, passionate and very smart. I am not as aggressive but I’m smart,” says Sadler. “And I’m Canadian. So I’m rather charming.” Thomas Adcock is a reporter for the New York Law Journal, an ALM publication affiliated with IP magazine.

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