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A scrappy pair of intellectual property litigators at Orrick, Herrington & Sutcliffe have declared war. Rodger A. Sadler and Robert A. Cote mean to take a hard new line against so-called “patent trolls” — shell companies usually run by lawyers and formed for no other discernible purpose than to press infringement claims in the cause of their sole assets, a handful of questionable patents often purchased at desperation prices from failed entrepreneurs. Emboldened by recent significant defense victories — on behalf of clients such as Universal Instruments, Compal Electronics, Unisys, York International and NCR — and fresh from an invigorating conference in Washington, D.C., with their colleagues of the patent bar, Cote and Sadler have honed what they call the “bloody-nose approach” in dealing with trolls. “We have a strategy. It’s called fighting back,” said Sadler, 37, an Orrick associate who grew up on an eastern Ontario cattle farm and studied chemistry and physics before graduating from Osgoode Hall Law School at the University of Toronto. Against the increasingly demanding “troll bar,” he added, “We bloody their nose by working hard in preparing the case for trial with every intention of taking it the distance, and thereby kicking some ass — thereby sending a message to other trolls out there: We’re not to be messed with.” Cote, a 41-year-old Orrick partner, electrical engineer and a wicked lacrosse player, is equally fire-breathing in describing such strategy as the basis for negotiating a favorable settlement with opposing counsel. “You build bonds with someone after you basically beat his ass,” said Cote, who switch hits as an occasional and bona fide plaintiff counsel in patent litigation. With respect to bottom-feeding patent trolls, Cote and Sadler find themselves in the thick of a legal phenomenon that, according to an in-house counsel survey by Hildebrant International, resulted in a 32 percent rise in corporate spending on IP litigation between 2003 and 2004. The boost is due in significant part to plaintiff trolls — which defense lawyers also call “patent pirates,” “patent predators” or just plain “vultures.” Companies faced with defending themselves against troll-driven infringement claims — and the prospect of spending as much as $4 million and two years’ time in complex litigation — are frequently persuaded to take the path of least resistance by forking over a few hundred thousand dollars as settlement or agreeing to pay royalties. According to published reports, Jay Monahan, vice president and associate general counsel of eBay, the online auction house based in San Jose, Calif., called this “an unfortunate cost of doing business” during last month’s one-day conference on “trollery,” sponsored by the Intellectual Property Owners Association, a trade group. Following years of litigation in U.S. District Court for the Eastern District of Virginia, the “cost of doing business” for Research in Motion, maker of the ubiquitous BlackBerry, was $450 million — in settlement last month of NTP Inc. v. RIM, 3:01CV767. But on April 6, the U.S. Patent and Trademark Office took a second look at the validity of the five patents in question, rejecting one outright and, according to some observers, strongly indicating that the other four would soon be rejected as well. Nevertheless, NTP attorney James H. Wallace Jr., a partner at Wiley, Rein & Fielding in Washington, D.C., told reporters at a capital press conference that the matter would be appealed — a process that will assuredly take more years, and more legal fees. OVERBURDENED OFFICE According to the National Academy of Sciences, an overburdened Patent Office — where some 3,000 examiners handle 350,000 filings a year, spending an average of 17 to 25 hours in vetting a patent application against “prior art,” or pre-existent use — has granted far too many overly broad patents, inspiring the rise in litigation and resultant logjams in court. An academy survey found that while the Patent Office in recent years has green-lighted 95 percent of applications — compared with 65 percent in Europe and Japan — fully half the U.S. applications were ultimately found to be without merit, whether successfully defended against infringement claims or, as in the case of NTP v. RIM, settled before trial. Small wonder that lawyers from around the country gathered last month to compare notes and strategies on the topic of those who would take unfair advantage of circumstances favorable to what some particularly zealous patent defense attorneys call “corporate shake-downs.” The zealous are advised to temper their words, however, in view of Peter Detkin’s experience. Detkin, former associate general counsel of Intel Corp., coined the term “patent trolls” after his company was sued for libel in 1999 for using the phrase “patent extortionists.” The libel suit was dismissed. Cote and Sadler, as well as other patent lawyers, consider the word “troll” as an homage to the miserable creatures of fairy tales who live beneath bridges built by others yet sustain themselves by charging tolls for bridge use. NOT ALL ARE ‘BAD GUYS’ Bruce Berman, president of Brody Berman Associates, a New York consultant to patent owners who is not himself a lawyer, said he cautioned patent defense attorneys at the Washington conference against considering all plaintiff attorneys as miserable shake-down artists. “All patent owners have a right to a return on their investment,” Berman said in an interview. “Not all asserters are trolls, and certainly not all assertions are improper.” Trolls, he said, are “bad and harmful and should be eliminated.” But, he cautioned, “everybody who asserts patents tends to get painted with that brush. Everybody’s not a bad guy.” He acknowledged, however, that the current climate makes room for trolls, evidenced by increased infringement claims. The number of multimillion dollar patent suits in the United States rose steadily from 1,178 in 1991 to 2,483 in 2001, said Berman. In 2003 through the first quarter of 2004, he added, that number had ballooned to 2,978. “There’s an arms race going on now, with people just grabbing at patents with little regard to their quality,” said Berman. “They want to stockpile them, and cross-license them. In fairness to the patent examiners, it’s very difficult to issue patents that are perfect. It’s expensive to do the scrutiny, so they’ll leave it to litigation.” On the other hand, Berman said he suspects, the federal government looks on the Patent Office as a “profit center,” encouraging a steady stream of fees for applications on patents of little more than litigation value. If a given company becomes known to trolls as a “settler,” said Berman, “they’re going to get picked on.” Companies “banding together in some fashion,” he suggested, may be a means by which settlers might fend off further lawsuit harassment. DEFENSE TACTICS Enter Cote and Sadler, whose patent defense tactics include reaching out to their clients’ business competition for cooperation in the crucial discovery phase of litigation. In this pursuit, said Cote, “Good people skills are essential. If people don’t like you, you don’t get in the door. We go to competitors and make it clear that if our client doesn’t win, they’re next on the hit list.” said Cote. “Rodger does this well.” With Cote’s encouragement, Sadler is the one who gets through doors. “Everybody loves Rodger,” said Cote. “He’s got a disarming way about him.” On more than one occasion, said Cote, Sadler has been permitted to speak freely with present and past employees of a client’s competitor. In addition, Sadler often finds himself in the role of detective, inspecting outdated computer equipment and visiting antique technology shows and thumbing through the advertising pages of trade publications in search of prior art. In nose-to-nose litigation, Cote likens his patent background as both plaintiff and defense counsel to his lacrosse playing days. “In lacrosse,” he said, “you learn to do some things lefty and some things righty.” “We’re a lethal combination,” said Sadler. With reference to Cote, he explained, “Bob is aggressive, passionate and very smart. I am not as aggressive, but I’m smart. And I’m Canadian, so I’m rather charming.”

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