THE INNOVATIVE STATE Patent Law Technology: NJ’s Economic Catalyst Why Patent Applications Increase in a Down E conomy By Joseph Cavaluzzi, Contributing Writer E ven in a down economy, New Jersey companies continue to generate new patent applications, keeping attorneys special- izing in intellectual property rights busy. Ranked fifth in the nation in patent infringement litigation, the New Jersey docket reflects the state’s history of innovation. Even as the telecom companies shrank and pharmaceutical growth has slowed, the rise of biotech companies, spin-offs and start-ups have helped maintain a growing pipeline of patent applications in the Garden State. The global nature of the economy is driving business for intellectual property attorneys. It also is changing the role of intel- lectual property in corporate cultures; elevating patent application filings is an important part of strategic business planning. The patent law business also is changing as a result of recent federal court decisions and cases that were still being decided as this story went to press. Congress, which has let the proposed Pat-
ent Reform Law languish for several with a growing number of smaller other than the lawyer’s and some in- years, may act on it by this summer, companies, spin-offs and start-ups house business folks. The rest is gravy some of the attorneys interviewed here that are generating growth here. Plus, in terms of income. From that perspec- say. when times are tight, companies look tive, we get busier when there is an The slowdown in the economy for ways to generate new revenues economic downturn.” in general and retrenchment in the with the intellectual property they One way of generating new rev- traditional bastions of New Jersey job already possess. enues on existing patents is by aggres- growth and patents issued - big pharma “In a good economy people build sively pursuing patent-infringement and telecom - is not changing the portfolios and protect their innova- cases. While not common compared amount of work for patent attorneys. tions. In a recession, they look for to other types of litigation, patent- “While it may affect the mix of busi- ways to generate royalty revenues or infringement suits are a growing part ness, [the changes in the state’s econ- litigate to protect their patents. They of intellectual property law practices, omy] have not affected the increase also look to make sure their licens- especially as clients do more business in of business for intellectual property ing agreements are being enforced a global economy. lawyers. For the past 10 years, IP has properly,” Kesslen says. “We continue “If you have a successful patent, grown in importance to companies in to see growth from mid-sized pharma- there are going to be competitors that New Jersey,” notes Marc S. Friedman, ceuticals and life science companies try to grab market share, and the stakes who chairs the intellectual property and we’re seeing more start-ups in in technology tend to be high,” says practice at Newark-based Sills Cummis Internet and telecom businesses.” Bruce Sales, a partner in Lerner, Da- Epstein & Gross P .C. “A recent study Kesslen says the state may see a slow- vid, Littenberg, Krumholz & Mentlik, that reported that as much as 90 per- down in patent applications in the sum- LLP , a Westfield firm of more than 60 cent of the assets of Fortune 1000 com- mer months as companies adjust their lawyers that handles only intellectual panies are IP assets. So, while there’s budgets and start to confront the reces- property law. “Again, you have the been some decrease in the telecom sionary period we appear to be in now. global issue. Are you willing to sue peo- business, the importance of intellectual The nature of intellectual property ple in the U.S. and elsewhere around property to the companies that remain usually helps companies that rely on pat- the world? It would not be uncommon operating in New Jersey continues to ents go through short-term downturns for us to represent clients being sued or increase dramatically.” unaffected, says David De Lorenzi , chair- suing others in multiple countries.” Mark Kesslen, chair of the intel- man of the intellectual property group at Whereas 10 years ago people may lectual property group for Lowenstein Newark-based Gibbons P .C. , which has have been dismissive about patents in Sandler, splits his time between the additional offices in New Y ork, Philadel- places like China and India, today pat- firm’s Roseland and New York offices phia and Delaware. ent licensing goes on in every country. and is spending more of it dealing “Intellectual property is an asset that A very significant layer of sophistication companies are reluctant to stop protect- has been added to patent law: Deter- ing, particularly when things already mining in which countries it is worth have been developed in-house. Notwith- the cost of pursuing patents and the standing economic downturns, com- extent to which they can be enforced. panies are not likely to turn away from It also can add a very significant research efforts in which they’ve already layer of cost to the process of applying made an investment,” De Lorenzi says. for and protecting patents. Cutting research staff means cutting “Companies have to weigh the cost workers with the skills and experience of extending intellectual properties to develop new products. and products into [certain countries] Patent applications cost from and whether it’s worth seeking patents $10,000 to $35,000, a relatively small in those countries. Understanding the cost compared to the R&D investments business environment overseas is more that run into the millions of dollars for important than ever,” says De Lorenzi. pharmaceutical and biotech companies “Look at Intel’s recent announcement to do research and conduct trials. that it was investing $500 million in “You could argue that in an eco- China. Intel is a tech gorilla and its nomic downturn, our business gets strategy behind the move doesn’t nec- more busy as companies look for essarily apply to every emerging com- alternative sources of revenue with low pany. On the other hand, Intel wasn’t David De Lorenzi, chairman of the intellectual property overhead. One of them is licensing,” always a gorilla.” group at Newark-based Gibbons P.C. De Lorenzi says. “There’s no overhead Gibbons has been asked to consider 2 J U N E , 2 0 0 8
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