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Two years ago, Palm Inc. General Counsel Mary Doyle spent 20 hours combing the Web for patent lawyers. Her target was the smallest of IP boutiques, with no more than three to six lawyers. Today, they are no easier to find. “They don’t get a lot of attention, yet they are the bread and butter of our patent prosecution strategy,” she said. While some of these mini-boutiques are so small they don’t even have an online presence, what they have to offer is irresistible to GCs constrained by tight budgets: a highly specialized legal expertise, familiarity with the industry and cost competitiveness. “Like most [Silicon] Valley companies, we look for exceptional quality at a good price,” Doyle said. “We’re looking to file as many patent applications as we can for our investment dollar. In our experience, big firms can’t consistently compete on price in this area.” Most are manned by computer scientists and engineers of all stripes who crowned their technical degrees with a law degree. Operating with low overhead and single-minded purpose, patent boutiques generally have no venture capital connections, no litigation or corporate capacity, and only limited licensing abilities. A UNIQUE NICHE Many IP boutiques rose from the ashes of medium-sized firms that shrank or folded after the Internet bust. Still others are big-firm refugees: lawyers who realized they could run their own practice without the hassles of a big firm while charging less and still making more money. Brian Ogonowsky and a handful of other lawyers founded the Patent Law Group in 2002 after leaving Skjerven Morrill Macpherson a year before the 62-attorney IP firm folded. “We were tired of training the associates, tired of the instability,” Ogonowsky said. “We just wanted to do the work.” The core of the group’s work is writing patent applications and prosecuting them for high-tech clients such as Micrel Inc., Philips Lumileds Lighting Co. and National Semiconductor. Ogonowsky holds a degree in electrical engineering, while others at his firm have degrees in mechanical and chemical engineering. There’s surprisingly little overhead to the business, Ogonowsky said, and less hustle for more buck. “At Skjerven as a senior partner I would make 50 percent of my billings,” he said. “Here I make 75 percent, so I make a lot more money, and I don’t work as hard.” Part of the micro-boutique strategy is to pass the cost savings onto the client. The Patent Law Group’s four lawyers, all senior-level, charge between $250 and $340 an hour. “I have more than 20 years of experience,” Ogonowsky said. “I would be billing $500 per hour at a large firm.” Client Vince Tortolano, Micrel’s vice president and general counsel, has worked with Ogonowsky for almost 20 years, following the lawyer after his departure from Skjerven. Tortolano said the 900-employee company’s IP portfolio has been ramping up rapidly over the past six years, helping it to garner an estimated $250 million in annual revenue. “Because we’re a smaller company, it makes sense to try to find firms that we can get a little closer attention from,” he said. “[The Patent Law Group's] knowledge of our technology and the fact that they’re very cost-effective make them a very good choice for us to use in our patent prosecution,” he said. HANGING WITH THE BIG BOYS Mini-boutiques aren’t aiming to put large firms out of business. “They’re competition for patent prosecution work in certain quantities. Many of these firms do very good work,” Townsend and Townsend and Crew Chairman James Gilliland Jr. said. “But when their patent portfolios get too big or the problems get too big, [clients] tend to use larger firms.” Though the existence of mini-boutiques puts pressure on pricing, larger firms aren’t walking away from patent prosecution. At Cooley Godward, where patent prosecution is seen as an integral offering, the firm offers nonlawyer patent agents who bill at about $200 an hour. Associates charge about $250 and the most experienced partners about $525. “We try to offer a diversity of skills and costs so we can match client needs,” said Thomas Friel, a litigator at Cooley Godward. At a mini-boutique, he argues, “you don’t get the cross-pollination of ideas you get at a big firm.” Most tiny-firm lawyers, however, say they have no interest in competing for work with the big boys. In fact, many partner with big-firm lawyers through informal networks, swapping client referrals and passing on work. “We’re slow growers,” said Burt Magen, a partner at seven-lawyer Vierra Magen Marcus & DeNiro. “We intend to stay a boutique. If you’re a multi-practice firm there tends to be more friction among partners and more inefficiencies that translate to higher costs to clients.” Magen, whose clients include SanDisk Corp. and Microsoft Corp., said his firm stays away from litigation because it requires more resources and instead partners with lawyers at big firms on an as-needed basis. “We don’t take clients from them, we make them look good,” Magen said. “They refer clients to us, we do the work, we refer clients to them, everyone is happy,” he said. “The important thing is to find a couple of good firms who you know will do a good job so the client is satisfied.” While IP boutiques are quite happy to exist in their little niche, they do acknowledge one major threat from the bigger firms: the ability to recruit seasoned attorneys. “With patent law you can’t just be a good lawyer. You need to have a good technology background, so it’s hard to find lawyers with good tech backgrounds,” said Magen. A GLOWING FUTURE Despite the competition for talent, there’s so much work to go around that some IP boutiques are not only turning clients down, they are growing past the micro stage. Founded in 2000, Hickman, Palermo, Truong & Becker has a single office of 15 lawyers in San Jose. The firm handles transactional IP legal services, including patent prosecution and preparation, trademark prosecution and copyright registration. HPTB partner Christopher Palermo said he’s seen a “significant increase in business since the summer of 2005, and his firm is in growth mode to support the growing business. Work is coming from large-cap companies, venture capitalists seeking help for their patent portfolio companies, and large and mid-sized startups, he said. While Palermo closely guards the names of his clients, U.S. Patent and Trademark Office records show the firm has recently worked for TiVo, Netflix, Apple Computer Inc. and Cisco Systems Inc., among others. And his firm is hiring at every experience level, from law students to laterals. So far, 2006 looks “totally bullish,” according to Palermo. “There’s more work than anyone can do right now,” he said. “It’s not quite 1999, but I get many calls that I have to decline or can’t take on.” That may explain why Doyle, the Palm GC, says companies closely guard the names of their favorite hard-to-find mini-boutiques. “There are no lists,” she said. “You have to talk to someone who knows.”

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