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From Napster’s war with the recording industry to Xilinx’s high-profile fight with Altera, the San Francisco Bay Area was once again at the center of intellectual property law in 2000. “We are the belly button of the IP universe,” said Katharine Patterson, a legal consultant specializing in IP. “We’re the big black stone in the temple of Delphi.” Large general practice firms and IP boutiques in the Bay Area have all been deluged with work — including patent litigation and prosecution and IP-related transactional work. But the big IP litigation cases — with some exceptions — tended to go to the general practice firms. “Traditional patent firms are not at the top tier of litigation anymore,” said Henry Bunsow, a partner in San Francisco’s Keker & Van Nest. San Jose’s Altera, for example, hired New York boutique Fish & Neave for what turned out to be a seven-year legal battle with Xilinx, which accused Altera of infringing semiconductor chip patents. But when the case was on the brink of trial, Altera dropped Fish & Neave and hired San Francisco’s Morrison & Foerster. David Hayes, a partner in Palo Alto’s Fenwick & West, said that IP boutiques are unable to compete with general practice firms in associate salaries and full-service capabilities. These limitations have allowed large firms to strengthen their IP practices at the expense of boutiques. Hayes may have a point. Two longtime San Francisco IP boutiques — Limbach & Limbach and Majestic, Parsons, Siebert & Hsue — disbanded at the end of year 2000. Michael Rhodes, a partner in Cooley Godward’s San Diego office and counsel for MP3.com Inc. in litigation with the recording industry, agrees: “It’s increasingly difficult [for boutiques] to maintain client relations on big matters except for boutiques headed by national trial lawyers, such as David Boies.” Boies, who gained prominence as prosecutor in the U.S. government’s antitrust suit against Microsoft, is counsel for Napster along with attorneys from Palo Alto’s Fenwick & West. MAJOR IP PLAYERS Ask any firm in the Bay Area who the dominant players are in the IP arena and you’ll get a different answer. It depends on what industry you’re talking about and what area of IP, said Michael Jacobs, co-chairman of Morrison & Forester’s IP group. “Clients are more differentiated,” Jacobs said. “They are asking what we do in semiconductor litigation and biotech litigation” and whether it’s in patent or copyright disputes. MoFo is involved in several major biotech patent cases, as well as a few major Internet-related suits. Cooley Godward and Fenwick & West are representing clients in high-profile Internet copyright suits. Litigation boutique Keker & Van Nest primarily handles electronics, biotech and medical device cases. And IP specialist Townsend and Townsend and Crew handles cases ranging from semiconductor and software patent infringement to antitrust suits, including a class action against Microsoft Corp. The rising tide of work is lifting all firms. Keker & Van Nest’s Bunsow said that seven or eight years ago, there were a half-dozen firms handling IP cases in the Bay Area. Now, he said, “it’s very well spread among many firms.” About 20 different firms compete for clients in various beauty contests. THE INTERNET LIMELIGHT The pre-eminence of large firms is apparent in high-stakes Internet litigation. For example, Fenwick beat out several other firms competing to represent Napster after the company was sued last November. Boies joined the defense team in June. Cooley Godward is representing MP3.com and eBay Inc. in cases that are helping to define the application of copyright law to the Internet. In the MP3.com case, a federal judge in New York ruled the company was liable for copyright infringement for copying thousands of audio CDs onto its computer servers for access by consumers who already owned the recordings. And in a trespassing suit against Bidder’s Edge Inc., eBay won a preliminary injunction to block the auction aggregation site from using its Web crawler to access eBay’s site. Cooley acquired the litigation work as a result of its long-standing relationship with the two companies. The firm took MP3.com and eBay public, as well as San Diego-based Qualcomm Inc., which Cooley has represented in several patent disputes. Among other firms in high-profile Internet cases, Morrison & Foerster is representing DoubleClick Inc. in two major cyberspace issues: privacy and business method patents. In a class action against DoubleClick, plaintiffs claim the online advertiser is secretly collecting information on Internet users. In another case, DoubleClick filed suit against L90 Inc. claiming patent rights to a commonly used method of delivering advertising on the Internet. In addition to handling litigation, firms like Fenwick and MoFo are also dealing with IP on the corporate side. “We’re seeing a hybridization between transaction and patent lawyers,” consultant Patterson said. Attorneys are now analyzing the value of IP in mergers and acquisition transactions and licensing deals, she said. Patterson said the firms handling this work include MoFo, Cooley, Brobeck, Phleger & Harrison, Heller Ehrman White & McAuliffe, Venture Law Group and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian. Fenwick & West’s Hayes also cited the growing amount of IP business on the corporate side. “The Internet has caused the amount of IP work to go up geometrically” since IP is the only asset many Internet companies have, Hayes said. “It’s causing an explosion in counseling and licensing transactions, partnering and co-branding [agreements].” THE NEXT WAVE As to future IP business, attorneys point to several new waves of litigation looming on the horizon. In the Internet arena, they anticipate more disputes over business method patents. Several suits are pending that will determine the extent to which companies can claim a patent on a way of doing business on the Internet. One of the key cases is Amazon.com Inc.’s suit against Barnesandnoble.com Inc. over its so-called “one-click” purchasing method that allows Internet customers to buy products with a single mouse click. Lynn Pasahow, a partner in McCutchen, Doyle, Brown & Enersen’s Palo Alto office, is Amazon.com’s counsel. Outside the Internet realm, attorneys also expect to see more litigation in the biotech and telecommunication industries as a new cycle of products comes on the market. “Over 50 percent of the patent-related cases we’re working on are in the biotech and telecommunications area,” said James Elacqua, head of Brobeck’s IP group. For example, Brobeck is representing GTE Corp. in a patent dispute with Qualcomm over cellular telephone technology. MoFo’s Jacobs also pointed to the growing amount of litigation in the biotech field. MoFo is representing the University of Rochester in its suit against Searle & Co. Inc. over rights to Cox-2 inhibitors, a kind of super aspirin. The firm also is handling several cases for Chiron Corp., including a patent infringement suit against Genentech involving Genentech’s Herceptin breast cancer drug. Keker & Van Nest is representing Genentech in the matter. These cases are just a sample of those handled by Bay Area firms. But they indicate the growing opportunities in the intellectual property arena. “The reality is that the IP area is growing at such a rapid rate that there is enough business for anyone good at it,” Keker & Van Nest’s Bunsow said.

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