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Until recently, intellectual property was little more than a legal backwater, with patent lawyers more likely to represent, say, mad scientists working out of their basements, than people the world took seriously, such as investment bankers taking a company public. In the last decade, however, as the economy picked up thanks to technology, so has the status of IP attorneys. The start-up world — where often a company’s only assets are its intellectual property — has made the financial community keenly aware of the potential value of patents. And the financiers certainly took note when even long-established companies such as IBM took a second look at their patent portfolios and saw staggering increases in licensing revenues. With these developments convincing financial backers that patents can be turned into profits, attorneys who understand intellectual property are in high demand. What is more, patent lawyers are themselves increasingly focused on the very real financial consequences of their work. The result is that IP lawyers are now turning their attention to business issues not strictly related to patent prosecution or litigation, such as product development, strategic planning and even evaluating a company’s worth. “We’re taking companies that come to us and telling them, ‘Guess what? You’ve got a lot more than what you thought you had,’ ” said Brian Poissant, managing partner of the 220-lawyer intellectual property firm Pennie & Edmonds. Poissant, who has been leading the firm’s efforts to battle its “technogeek” image, heads Pennie & Edmond’s new high-concept “consulting group,” a hybrid practice area within the firm that works with inventors and the business community to “shepherd an invention to financial fruition.” “We help companies realize the true value of their portfolio,” he declared. The mandate of his consulting group includes not only obtaining patents, but suggesting new inventions that go beyond the scope of the clients’ original vision. For example, when a science lab client developed a new product to combat the AIDS virus, Pennie & Edmonds lawyer Laura Coruzzi, who is also a biologist, suggested that the client determine how this product could be used to fight other viruses. Coruzzi then sought patents to cover all possible anti-viral uses of the product, which are worth considerably more than a narrower patent on the anti-AIDS drug. Lawyers at Pennie & Edmonds are by no means the only ones broadening the scope of their intellectual property practice. Large firms with IP departments, as well as smaller boutiques, have become much more involved in advising clients on how to turn ideas into patent portfolios and then turn those portfolios into cold, hard cash. “My whole practice is focused on the commercial aspects of intellectual property,” offered Nigel Howard, a partner in the New York office of Brobeck, Phleger & Harrison. “Today, IP work involves an increased focus on transactional side of business,” he said, adding, “we have a number of strategies to create value, or tap into value of our clients.” This new emphasis on the strategic side of patent practice even has its own terminology. “Four words,” said Patrick Brennan, a consultant with Hildebrandt International. “Intellectual property asset management.” Brennan, who advises IP practices on how to develop business plans, said lawyers have an urgent need to focus on asset management. “It is an absolute necessity for a firm to move in that direction right now,” he said. Andrew Baum, managing partner of IP firm Darby & Darby, points out that to some extent, patent lawyers have always used their scientific expertise to make business suggestions to clients. What is different today is that law firms are trying to do so in a more organized fashion and, more crucially, are promoting themselves to clients as offering this service. “IP lawyers want to be seen as being on the money-generating side of business, as opposed to the cost side of business,” he declared. At Pennie & Edmonds, the consulting group works not only with inventors, but also with the financial community to assist the venture capitalists in determining whether patents are valid and what they might be worth. For doing “due diligence” work, the firm has started toying with new types of contingent billing arrangements. In one recent deal, the firm agreed that if Pennie & Edmond’s due diligence resulted in the transaction going forward, the firm would receive a 25 percent bonus on top of the hourly fee; if the deal fell through, the firm would reduce its bill by 33 percent. The ambitious Pennie & Edmonds also has a plan to take IP asset management to yet another level by getting a number of universities to pool their patents into one fund. That patent pool could be used to create inventions greater than anything that one university alone could develop. To explain, Poissant offered this analogy: If one university had a patent for a good carburetor, a second university had a patent for good tires and a third for a good windshield, the patents could be combined to make a car that is better than the car any one university could produce on its own. While the plan is still embryonic, Pennie & Edmonds ultimately hopes to own a piece of the patent pool. Poissant said that one of his goals is to devise a system of compensation that goes beyond the billable hour approach. “This all came out of the fact that we are not just doing what clients asked us to do,” said Poissant. “We wound up making X amount of dollars on a per-hour basis that bore no relation to the value we added,” he continued. One possibility for the future includes taking a percentage of any licensing fees generated by the pool, but Poissant is open to other suggestions. “Quite frankly,” he wrote in a memo outlining the consulting group’s business plan, “our own creativity is probably the only limit on the potential opportunities in this area.”

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