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These days it takes a village to litigate a patentinfringement suit. There are 170 lawyers and 18 firms actively involved in thepatent battle between Gemstar�TV Guide International Inc. and its fourcompetitors. Gemstar has brought in Los Angeles’ O’Melveny & Myers, SanFrancisco’s Townsend and Townsend and Crew, and Washington D.C.’ s Hogan &Hartson. Firms on the other side include Atlanta’s King & Spaulding,Chicago’s Kirkland & Ellis, and San Francisco’s Morrison & Foerster. The Gemstar case is taking place at the International TradeCommission, but the staffing levels of patent suits in the trial courts arealso rising. Last summer in Amgen v. Hoechst, an infringement suitover a new drug that stimulates red-blood cell production, IP lawyers floodedthe Boston federal court. There were about 15 lawyers to a side, and a slew ofothers were sitting in the courtroom covering the trial for investors. In a time when dealmaking is down and out, IP litigation ishot and getting hotter. And full-service firms are desperate to get in on theaction. For high-stakes cases, clients are often willing to paywhatever it takes — ten or more lawyers and an equivalent number of paralegalsand others. When the technology is particularly difficult, as in a biotechcase, specialists are added to the team. The cost to bring a patent case, say experienced IP lawyers,ranges from $750,000 to $1 million for a simple dispute and from $4 million to$8 million for a modest one. Monster cases can cost $10 million or more. Consultant Peter Zeughauser of The Zeughauser Group ofCorona del Mar, Calif., says that IP litigation is becoming many firms’big-ticket practice area. Patent cases are “perhaps the most profitablekind of litigation other than plaintiffs contingency-fee cases,”Zeughauser says. In 2001′s most significant IP plaintiff’s verdicts, juryawards ranged from $10 million to more than $100 million. In February 2001,plaintiff Honeywell International Inc. won $46.5 million in an infringementbattle with Hamilton Sundstrand Corp. The Los Angeles and New York offices ofKirkland & Ellis represented Honeywell; Cleary, Gottlieb, Steen & Hamiltonrepresented Hamilton. In July 2001, plaintiff Cardiac Pacemakers Inc. won $140million in a dispute with St. Jude Medical Inc. involving a cardiac device. Thecase was litigated in the Southern District of Indiana. Chicago’s Held &Malloy and Indianapolis’s Baker & Daniels won the case. Los Angeles’Gibson, Dunn, & Crutcher; New York’s Gottlieb, Rackman & Riesman;Indianapolis’ Ice Miller; and Los Angeles’ Lyon & Lyon lost it. In Gaus v. Conair, a dispute in federal court inManhattan over hand-held hairdryers, the jury handed Gaus $28.5 million. Thewinning lawyer, partner Arthur Beeman of Louisville’s Frost Brown Todd, expectsthat the final judgment could hit $100 million, if the judge trebles damages. Big money for winners translates into big payoffs for firms.Court documents from Rambus v. Infineon Technologies, a case involvingsemiconductor devices, provide a clue. Infineon won the case, and Judge RobertPayne of the Eastern District of Virginia awarded $7.1 million in fees andexpenses to its lawyers. Infineon’s lead firm was Kirkland & Ellis; local counselwas Richmond, Va.’s McGuireWoods. Rambus’ lead counsel was San Diego’s GrayCary Ware & Freidenrich, and local counsel was Mclean, Virginia’s Christian& Barton. “The trial team was actually fairly small,” saysKirkland partner Gregory Arovas. His side used about eight lawyers, and theother side, he estimates, had no more than 12. Money isn’t the only part of the IP litigation equation;this work also takes time. It typically takes three years to bring a patentcase to trial. The Cardiac Pacemakers litigation began in 1997; the Honeywellcase, in 1999. Donald Ware, a partner in Boston’s Foley, Hoag & Elliot,says it�s frustrating for both him and his clients for a case to take so long. Robert Kahrl of Cleveland’s Jones, Day, Reavis & Pogueusually gives clients a cost timeline. “For many companies planning patentlitigation, it’s as important to know the cash-flow pattern of a patent case asit is to know the total at the end,” he says. The middle and latter part of discovery is costly, he says.About 50 percent of a litigation budget is spent during a two-week trialpreparation period, during the trial itself, and in post-trial stages. Theother half is spent in the time leading up to trial preparation. “You take the discovery cutoff and figure out whatfiscal year it’s in, and then you will get a map of your activity,” Kahrlsays. Expenses then fall off “until you get your trial date. … And whenthe trial date moves around, it screws up your financial planning.” Corporations are willing to pay the price because of theexploding value of IP. “In the pharmaceutical area, you may be fightingover patents to a drug that has up to $1 billion a year in sales,” saysCharles Guttman, an IP litigation partner at New York’s Proskauer, Rose. Increasingly, companies are turning to their patentportfolios as a source of revenue and IP litigation as a profit center, saysTerrence McMahon, an IP litigation partner at the Palo Alto, Calif., office of Chicago’sMcDermott, Will & Emery, who jumped from San Francisco’s Orrick, Herrington& Sutcliffe last year. As in mergers-and-acquisitions work in its heyday, premiumbilling is common. Zeughauser says he knows of some partners who charge $550 to$800 an hour. “I would say that up and down the line, patentlitigation is billed at 10 to 30 percent higher than … other areas,”acknowledges Jerry Riedinger, who heads the patent litigation group atSeattle’s Perkins Coie. At Milwaukee’s Foley & Lardner, “patentattorneys and IP paralegals do have slightly higher billing rates,” sayspartner Ted Rittmaster. The uncertain state of patent law helps drive up the cost ofcourt fights. In the 1996 decision Markman v. Westview Instruments, theU.S. Supreme Court established that trial judges would determine the scope of apatent as a matter of law. Now lawyers say they can’t predict how the U.S. Court ofAppeals for the Federal Circuit will treat a trial judge’s Markman determination,or if the case will bounce back and forth between the trial and appeals courts. Each patent is “like its own statute as a matter oflaw,” says Kahrl of Jones Day. “The guy who writes the patent can’tanticipate the goopy ways it will be [interpreted] later on.” In other areas of litigation, “people can assess therisk more easily,” says Zeughauser. “Settlement becomes easier. Thattends to hold the hourly rates down.” For all these reasons, law firms are flocking to IP. Thosethat did not already have a well-established IP litigation presence arescrambling to hire lawyers with this expertise. Competition for talent hasbecome so fierce that some firms are paying major hiring bonuses for lawyerswith patent experience. And headhunters are besieging IP specialty firms. Frost Brown Todd has about 50 lawyers in its IP litigationgroup and, even though the Louisville-based firm is far from the New York andSilicon Valley IP hotspots, “all of our people are hit on byheadhunters,” says partner Beeman. Litigator Peter Bucci, who recently jumped from Orrick,Herrington’s New York office to join Chadbourne & Parke, says he wasgetting at least three calls a day from headhunters before he made the move. Jonathan Marshall, who just left New York’s Pennie &Edmonds for Weil, Gotshal & Manges, says headhunters seeking IP talentsometimes call with rumors about a firm’s health “so they can terrorizethe younger lawyers into thinking they’ll be out on the street.” Marshalldid not leave Pennie & Edmonds for these reasons; he was attracted by thelure of building a practice. But litigation teams can’t be put together overnight.Scoring a few marquee-name hires from a competing firm isn’t enough. Firms needexperts with advanced degrees in the various scientific and technologicaldisciplines likely to be at issue in patent cases. Former patent commissioner Q. Todd Dickinson warns thatpatent litigation “is not one of the things you can dabble in or hope tocome into because it’s the flavor of the month.” His firm, Howrey SimonArnold & White, advanced its patent-litigation expertise dramatically inJanuary 2000 by merging with Houston’s IP specialty firm, Arnold, White &Durkee. New York’s Chadbourne & Parke is trying to get in thegame. The firm has had a high profile in securities and products-liabilitylitigation, and in recent years has been busy defending tobacco companies. Tenyears ago the firm probably did “zero” patent cases, says managingpartner Charles O’Neil. But now the firm has brought in some big-time IPlitigators, including Bucci and Lawrence Goodwin, both from Orrick, and MarkWaddell from St. Louis’ Bryan Cave. Now that the firm has hired the lawyers, it just needs theclients that will hire the firm.

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