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Jamie Isbester is flush with what could be called little-ticket litigation work. The Gibson, Dunn & Crutcher intellectual property litigator has launched more patent battles this year than last year, but they’re not the expensive, big-ticket disputes he’s used to handling. Almost everything about the boomlet of work Isbester is enjoying is small, from the clients to the markets they’re in — and yes, even the fees these matters generate. What marks the litigation is that the companies are using the lawsuits as competitive weapons, Isbester said. The goal is to weaken competitors by forcing them to divert scarce cash into fighting or licensing fees. When executives at these small companies approach Isbester, “the question is, what kind of damage can we do to their cost structure so that we gain increased market share?” the San Francisco litigator said. “All of a sudden, patent cases are being used to leverage small products in small markets and people are filing lawsuits for sums that seem to be less than it will cost to try them,” he said. In many cases, Isbester’s clients can barely afford to sue, and he’s increasingly forced to strategize on the cheap. IP litigation of any size has been a hot ticket in the San Francisco Bay Area in recent years. Technology companies have increasingly devoted more resources to protecting their core assets. Law firms have bulked up on IP lawyers, and litigators like Isbester and Bert Deixler of Proskauer Rose in Los Angeles say their caseloads have held steady or grown in recent years. The influx of smaller IP battles has litigators predicting a rise in the number of IP cases, which nationally has been rising. There were 7,838 IP matters filed in fiscal 2000, which ended Sept. 30, according to the Administration Office for the U.S. Courts in Washington, D.C. In 1999, there were 7,511 new matters filed nationally. That number includes patent, copyright and trademark disputes. Not all IP litigators in the Bay Area see the trend in smaller battles the same way. Big companies are also starting to chafe when it comes to smaller competitors, said Michael Ladra, an IP litigator at Palo Alto, Calif.-based Wilson Sonsini Goodrich & Rosati. “When times are really good, that kind of minor competition on the bottom end isn’t going to draw fire,” Ladra said. “As margins get squeezed, it does.” Even small-time competitors are a drag on pricing, effectively keeping prices low, Ladra said. In some cases, Ladra is called upon to counsel clients who are considering filing for new patents with an eye toward suing would-be infringers for licensing fees, in effect creating a new revenue stream. Wringing a settlement out of some companies may not be so simple, however. Some IP litigators are seeing clients dig in to fight instead of settle when they’re hit with so-called nuisance suits. “It’s getting harder to get rid of [them],” said Cathy Bencivengo, a San Diego-based partner at Gray Cary Ware & Freidenrich. “There’s just not the money to make these [suits] go away. “The clients say, ‘I’d rather pay my litigators and make them earn it rather than write out a check to some person who’s flaunting a patent portfolio,’ ” Bencivengo said. Clients in general have gotten more cost-conscious when it comes to waging war, say IP litigators. But as Isbester puts it, litigating small matters for little companies means building a case within a smaller budget. And that changes the way Isbester manages his practice. “Each step of the way, you do a cost-benefit analysis,” Isbester said. Instead of submitting to the client a plan with deposition and courtroom materials budgets and the like, Isbester is consulting with clients at every turn. That’s not to say clients micro-manage their cases, Isbester said, but they are keeping an eye on what it’s costing. “You tend to talk [to the client] about each deposition from a cost-benefit analysis,” Isbester said. “You have to ask if the information from the deposition is going to be enough leverage to get to a resolution.” Because the current trend in IP litigation involves smaller cases, partners are able to handle a greater of volume of clients, Isbester said. “Patent litigation is traditionally one of those things that is all-consuming, but now I have a half-dozen cases going on,” Isbester said. “None of which have enough in dispute to warrant all of my time.”

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