“Creative Destruction” in Legal Jobs VI – IP Law: Overview & Patents
February 5, 2012 The next several Law Careers blogs in my “Creative Destruction series explain what is happening in perhaps the most dynamic, evolving and rapidly-changing practice area of all―Intellectual Property Law. IP Law has gone along, grown and diversified as if the economic downturn never happened. That means a spate of attorney and law-related job and career opportunities that few other practice areas can boast.
Overview
This is the best time in history to contemplate a legal career in Intellectual Property Law. IP Law is perhaps the most dynamic and rapidly changing and expanding practice area there is today. In an era of overall “legal employment crisis,” IP Law has experienced none of this.
The underlying reason for this may well be the reversal in the breakdown of assets of America’s Fortune 500 in the last 25 years. In 1986, their IP and other intangible assets amounted to 32% of their total assets. The other two-thirds were were hard assets―largely manufactured goods.
Not so today. IP and other intangible assets now account for almost 80% of total assets. Moreover, if you look at all U.S. companies—not just Fortune 500s—the percentage is probably higher because so many smaller companies these days are in the technology sector. This sea change in asset class has more to do with surge in IP Law and its diversifying nature (which will be discussed in detail in this blog series) than anything else.
Patent Numbers
Patent practice is booming, which is nothing new. For decades, it has been largely impervious to the business cycle, continuing to grow in both good times and bad. The 2008 economic downturn, while the most severe in 80 years, did little to challenge this phenomenon.
A December 2011 study released by the World Intellectual Property Organization (WIPO) in Geneva, Switzerland (2011 World Intellectual Property Indicators Report http:// reported that IP filings worldwide rebounded in 2010 despite economic turmoil.
Statistics can tell you a great deal about where the job action is in any profession or even legal practice area. The patent numbers for 2010 cited in the WIPO Report are instructive.
The Report shows that IP filings worldwide rebounded strongly in 2010 after a slight decline in 2009. Global patent filings grew by 7.2 percent, with China and the United States accounting for the greatest share (80 percent) of the increased filings. In Europe, IP filing growth by France, Germany and the UK far exceeded the GDP growth rate of the three largest European economies in 2010. The total number of 1.98 million patent applications worldwide was an all-time high. Companies across the globe have been continuing to innovate.
The US patent office saw 7.5% growth in 2010 and received the largest total number of applications (490,226). China’s patent office (391,177 filings) overtook Japan’s (344,598 filings) to become the second largest recipient of patent applications in 2010, at the same time that China became the second largest economy in the world, as measured by GDP.
The majority of the top 20 national patent offices saw growth in applications in 2010. Double digit growth was reached in China (24.3%), the European Patent Office (12.2%), Singapore (11.9%) and the Russian Federation (10.2%). Colombia, Malaysia, Philippines, Ukraine and Viet Nam saw double-digit growth in applications in 2010.
The Report also analyzes the numbers of filings by resident applicants. These show similar trends, with Chinese residents (293,066 applications) overtaking Japanese residents (290,081 applications) to become the most active patent filers in 2010.
Residents of Japan (172,945 applications) and the U.S. (178,355 applications) filed, by far, the largest number of patent applications outside their own country. However, residents of Canada, Israel, the Netherlands and Switzerland filed more than 80% of their total applications abroad (the majority in the U.S.). Residents of China, on the other hand, filed only a small proportion (5%) of applications abroad.
The Report shows that computer technology, electrical machinery, audio-visual technology and medical technology accounted for the largest shares of patent filings worldwide. However, the relative importance of different technology fields varied substantially across countries. For example, information communications and technologies accounted for the largest share of filings in Finland and Sweden, with pharmaceuticals more prominent in Belgium, India and Switzerland.
Patents granted (as distinct from patent applications filed) have recorded uninterrupted growth since 2000. In 2010, the total number of grants worldwide stood at 909,000 - an additional 100,000 grants over 2009, a 12.4% increase. Resident grants accounted for two-thirds of the total increase. Japan and the U.S. accounted for around 80% of total growth.
Recent Developments
Several very recent developments have laid the foundation for even more robust patent practice growth expected in the near term.
America Invents Act
This recent legislation may provide a significant boost to accelerating bringing innovation to the marketplace, due to three provisions:
One location, Detroit, has already been decided as the location of one of the new USPTO field offices. It is worth noting that Rep. John Conyers (D-MI) of Detroit has been alternately the Chairman or Ranking Member of the House Judiciary Committee, which has jurisdiction over USPTO. Many Members of Congress have written the Obama administration, angling for a satellite office in their districts, including Republican Tea Party folks who shout out all the time about cutting government. As one Texas Tea Party representative said when asked if his strident advocacy of a new federal office might not be somewhat inconsistent with his very vocal beliefs about big government: “Some limited government is good” (especially if it benefits my district and can give me a boost toward reelection!) It gives these selective small government advocates some cover that the new offices will be funded by patent fees, not appropriations of taxpayer money. California (Silicon Valley), Colorado and Texas are falling all over themselves―and bad-mouthing each other―in an attempt to secure one of these offices.
Look for Texas to definitely get one of the offices, because Tea Party Rep. Lamar Smith (R-TX) is the current Chairman of the House Judiciary Committee. I think that California will get the third one because it generates by far more patents than any other state and is home to more engineers and inventors than anywhere else. The only possible pitfall is cost-of-living, which is one of the factors to be considered in the selection process. My fallback predictions are either Massachusetts or Colorado.
Look for 200-250 new jobs to be created by these field offices, most for Patent Examiners. More importantly, look for the new offices to become magnets for the creation of new legal positions in the private sector in the areas where they will be located.
The Fiscal Year (FY) 2010 University Licensing Survey
For nearly two decades, the Association of University Technology Managers (AUTM) has been compiling and publishing academic technology transfer data. The most interesting survey results follow:
Despite the difficult economic conditions, university and research institute licensing and startup activity remained very strong, showing healthy increases over FY 2009, as did the number of startups that remained active at the end of the fiscal year. FY2010 also saw a significant increase in total research expenditures (9.6 percent ) and the highest increase in patents issued since AUTM began collecting this data 17 years ago. Total research expenditures in FY2010 were $59.1 billion.
The number of startups formed increased 10.6 percent, while the number of licenses/options executed to startups increased 14 percent. There was a 15 percent increase in the total number of active licenses and options through the close of 2010 (38,528 total). 657 new commercial products were created. 651 startup companies were formed, 498 of which had their primary place of business in the licensing institution’s home state. 3,657 startups were still operating as of the end of FY2010. 4,469 U.S. patents were issued to American colleges, universities and research institutes.
Total license income increased 3 percent. Total income to these institutions was $2.4 billion, consisting of royalties, cashed-in equity and other income.
You can use this data to target university technology transfer offices, R&D offices and general counsel offices with a patent mission. The campus has been a growth bonanza for patent attorneys for some time now.
One of the next several blogs in this Creative Destruction series will examine the entire technology transfer industry for its legal job potential.
Huge and Rapidly Growing Market Demand for IP Assets
The market for buying and selling IP took off in 2011, marked most significantly by the Nortel auction that attracted wide interest and a great deal of money, Google’s purchase of Motorola Mobility, and Kodak’s impending Chapter 11 bankruptcy and desperation plan to sell its presumed $3 billion in patent assets (numbering more than 1,100), which far exceeds its diminishing market capitalization.
Beginning last summer, in-house IP managers began getting besieged with phone calls about IP positions, strategies, sales and acquisitions. If you talk to intermediaries and other consultants you get the same kind of feedback with regards to rights owners, venture capital funds, hedge funds etc. It seems that everyone is enthusiastic about―and wants to understand―the potential for buying and selling IP. At the same time, they also appear to be looking for ideas regarding how to develop longer-term strategies in order to maximize IP value in their own companies.
How long this enthusiasm will last is anyone’s guess. The latest scuttlebutt is that the estimates of market value that shook the IP world last year might have been somewhat overblown. Nevertheless, the concept of IP asset management on an on-going basis has definitely caught hold in both corporate and academic circles.
Another near-future Creative Destruction blog will focus on intellectual asset management.
Bayh-Dole and Stanford v. Roche,June 2011
This June 2011 decision by the U.S. Supreme Court is creating jobs for patent and other IP attorneys. In it, the Court interpreted the Bayh-Dole Act, Pub.L. 96-517, which promotes technology transfer between government and the private sector and is one of the most important pieces of legislation governing patent rights. The question in the case was whether Bayh-Dole automatically vests ownership of patent rights in universities when the underlying research was federally funded.
Bayh-Dole is one of the best pieces of legislation enacted by Congress in its long history. It has led in 30 years to the commercialization of innumerable new technologies and the creation of more than 7,000 new businesses as a result of research conducted at U.S. universities.
The Court upheld the Federal Circuit and found that Bayh-Dole could not be used by a university to claim ownership in a subject invention where the inventor had previously and validly assigned rights to a third party.
The immediate impact of the decision is that now Universities have to be much more careful when drafting agreements with researchers, as well as do a much better job of monitoring agreements those researchers sign when they collaborate with outside organizations, whether formally or informally. And that means more legal scrutiny in both the preparation and administration of such agreements.
Where to Look for Opportunities
This is a question on two levels: First, as to type of employer; second, as to geographic location.
Employers
Patent attorneys are becoming increasingly ubiquitous as society becomes more high-tech. Today, you can find patent lawyers in virtually any type of company, major and boutique law firms, a wide variety of nonprofit organizations including universities, research institutes and hospitals, government agencies and federal laboratories, and in international organizations such as WIPO (it helps if you are proficient in a foreign language).
Geography
Patent lawyers tend to be concentrated in places where high technology jobs are, in general, abundant. The only exception is the Washington, DC area, due to its being the home of the USPTO.
Tech jobs are concentrated (1) around major research universities like Stanford, Harvard, MIT, Cal Tech, Princeton, etc.; (2) regional economic clusters such as Silicon Valley; the Convergence Corridor b/w Denver and Boulder, Colorado; Northern Virginia; the Interstate 270 Corridor in Washington, DC’s Maryland suburbs; Research Triangle Park, North Carolina; and the Route 128 Corridor in the Boston area, among others; and (3) wherever venture capital firms congregate.
Credential Enhancers
Assuming that you are already a patent attorney or aspire to be one, you can position yourself best for a job by becoming admitted to the Patent Bar, of course, but also by adding some courses available from WIPO through its distance education mission. Relevant courses include:
- Introduction to the Patent Cooperation Treaty (online)
- Biotechnology and Intellectual Property (online)
- Arbitration and Mediation Procedure Under the WIPO Rules (online)
- Patent Information Search (online)
- Basics of Patent Drafting (online)
You can also become a member of one or more professional organizations that serve as networking venues, information resources and providers of advance notice of possible job and business opportunities, such as:
- National Association of Patent Practitioners
- American Intellectual Property Law Association
- Intellectual Property Owners Association
Next: IP Law – Trademark Practice
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