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Five years ago, Thomas Friel Jr. would have been the last to admit he was working for patent-holding companies. Like most Silicon Valley attorneys with a large base of tech clients, Friel feared the stigma attached to entities that collect patents for licensing purposes � often derided as patent trolls, patent terrorists and extortionists. “Like Rodney Dangerfield, IP holding companies got no respect,” says Friel, who heads Cooley Godward’s Bay Area patent litigation practice. “They were spurned by legitimate producers of goods and services and no one wanted to deal with them � especially large law firms that didn’t want to alienate their corporate clients.” Today it’s a different story. The veteran patent litigator is no longer shy about how he represents patent-holding companies. In fact, he says, his firm would like to do more work for them. Many IP lawyers from other big firms are also more than happy these days to help patent enforcers. The reason: patent-holding companies are multiplying and generating plenty of legal chores � litigation, licensing transactions and corporate work. “We are no longer just dealing with classic patent trolls that are just out to get cheap licensing fees,” says Friel. “There is a lot of money being made in this area and what we have now are sophisticated companies that are heavily financed by big investors and big corporations.” New York’s IP Finance is one of those patent-holding companies that law firms are vying to represent. Founded in 2000, the company helps patent owners license and enforce their rights in court. So far, it has been successful in licensing patents owned by biotech research firm PharmaStem Therapeutics Inc., based in Larchmont, N.Y. The company claims to own patents covering the storage and therapeutic use of umbilical cord and placental blood stem cells. It has licensed the technology to 20 of the 24 cord blood banks around the country. The four holdouts are appealing a multimillion-dollar patent infringement verdict. Nicholas Didier, IP Finance’s president and CEO, says the company is “in the process of expanding its capital base as well as broadening its IP portfolio.” Didier was in the Bay Area not long ago to scout for law firms that would help the company structure some of those deals. “We are looking for lawyers in major law firms with stellar credentials and specific skills and experience in the technology we are acquiring,” he says. Paul Andre, a litigation partner at Perkins Coie in Menlo Park, has done a fair amount of enforcement work for patent holding companies, including IP Finance. He says patent enforcement has come a long way from when it was viewed as a shadow industry inhabited by a few notorious licensing shops that wielded broad patents through a small band of contingency lawyers. Now, patent-holding companies include many major corporations that have set up subsidiaries for the purpose of commercializing and monetizing their intellectual property. Even Silicon Valley firms like Intel and Hewlett-Packard, long the targets of patent trolls, are investing heavily in licensing their patents. In fact, it is becoming increasingly difficult to distinguish licensing work done by corporations and the traditional patent- holding company, says Andre. “There’s not much difference anymore between people who speculate in real estate and those who speculate in IP,” he says. “Some of them have spent hundreds of millions of dollars to develop the technology and obtain those patents and they are trying to get fair market value for their IP.” Cooley, which counts among its clients some of the largest patent-holding companies in the country � including Ronald A. Katz Technology Licensing and AT&T � bills itself as a one-stop shop for patent-holding companies. “We want to handle everything for them, from setting up affiliates to helping them develop licensing models or even helping them shore up their portfolio by helping them find valuable patents,” says Friel. “We now have a substantial amount of litigation business representing holding companies and traditional companies that want to monetize their portfolios.” Indeed, Cooley is currently representing more than a half-dozen patent-holding companies in multiple lawsuits. “We are starting to discover that some of our best friends are trolls,” jokes Friel. Many major law firms, however, are still reluctant to deal with patent enforcers for various reasons. Some firms that are cultivating defense work turn away what they call “made for lawsuits” companies because they don’t want to alienate potential corporate clients. “We represent a large technology client base and these are the typical companies that are being harassed by large patent- holding companies so we try to avoid taking on those cases,” says Craig Tyler, a patent litigation partner at Wilson Sonsini Goodrich & Rosati’s office in Austin, Texas. But that doesn’t mean the firm’s lawyers are cut off from the lucrative transaction work being brought in by holding companies. For example, Wilson partner Selwyn Goldberg does extensive work setting up holding companies. The firm just has to be careful when it comes to choosing clients, he says. “The pure patent-holding company could present serious conflict risks for law firms because there is always a risk they would want to sue one of your clients or a future client,” says Goldberg. Friel says he isn’t bothered by potential conflicts issues. “Conflicts are a fact of life for every large law firm,” he says. “You just have to pay very close attention to it.” Some law firms may also be shunning patent-holding companies because of their reputation for not paying full price. But Didier says that is not true anymore, at least as far as his company is concerned. “We don’t believe in contingency fees,” he says. “We believe that the services should be properly compensated, and law firms are not well-equipped to bear a financial risk. That’s why we raise our own capital.”

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