Dennis Fernandez wears Hawaiian shirts to work almost every day, along with khaki pants and matching canvas shoes with no socks. He shreds the stereotype associated with patent prosecutors as techno-geeks more adept at dealing with algorithms or DNA sequences than with business realities. In fact, the founder and sole owner of six-lawyer IP specialty firm Fernandez & Associates in Menlo Park, California, looks and talks more like a Silicon Valley entrepreneur than a patent attorney. That's not surprising, given his specialty: writing patent applications and building patent portfolios for start-ups and inventors, with a view to attracting venture capital funding. "We're really a hybrid between a venture capital and a patent firm," explains Fernandez. "We always keep an eye on the market and the research community, so we can draft patent applications that will still be relevant eight years from filing."
Standing out in a crowded field is no easy feat for an IP boutique. But some firms have found that being small-really small-is beautiful. By focusing with laserlike intensity on a specialty and offering deep industry-specific knowledge, some boutiques with six lawyers or less get an edge over bigger boutiques as well as the IP departments of large general practice firms. As companies grow more sophisticated, they often treat law firm services as a "smorgasbord," rather than "one-stop-shopping," says San Francisco IP consultant Katharine Patterson. "Clients go to big firms for big-ticket litigation work and high-end licensing work, and they go to boutiques that offer niche specialties." The trend, she says, is encouraging more IP professionals to go out on their own and open micro-boutiques. In the Silicon Valley area alone, Patterson estimates, there are more than 50 specialized patent prosecution firms. The good ones are in high demand among clients and make "a very good living," some pulling in over $1 million in billings, according to Patterson.
Some legal consultants and veteran IP lawyers scoff at the practice of touting micro-specialties, calling it simply a marketing ploy. "In my experience, firms try to attract as much business as possible, regardless of the source," says law firm consultant Rich Gary. "You're much better off hiring the best lawyer in the general technical discipline that your invention covers," says veteran patent attorney John Dragseth, a partner at Fish & Richardson in Minneapolis. "He or she can get up to speed with it real quickly."
But clearly, some small firms have flourished by focusing on underserved clients or areas of IP practice that are too esoteric or specialized for general practice firms.
For instance, the unique professional background and expertise of Fernandez has made him a go-to guy for start-ups, and for venture funds and their portfolio of fledgling companies. Before founding his firm in 1996, Fernandez worked for several years as a semiconductor chip engineer at NCR Corp., AT&T Inc., and Digital Equipment Corp. After receiving his law degree from Suffolk University Law School in Boston, he advised venture capital funds on intellectual property issues while doing a stint at Silicon Valley firm Fenwick & West. He also worked as a venture capitalist for two years for funds in Singapore and the Philippines.
His firm's team of attorneys, technology experts, and paralegals works with the inventors or company founders on developing a business plan based on what they hope to patent. The result, he says, is a portfolio of "forward-looking" patents that could in the future be part of an emerging industry standard or make a company valuable for acquisition.
Fernandez has developed a loyal following among fellow Silicon Valley attorneys and VCs, like Catherine Ngo at Palo Alto's Startup Capital Ventures. Fernandez's business savvy and his knowledge of the semiconductor industry distinguish his firm from run-of-the-mill patent prosecution firms that churn out patent applications by the dozens, Ngo says. "We're not just looking for someone who can prosecute patents for our portfolio companies," she says. "We want someone like Dennis who can develop a patent strategy that takes into account what our competitors are doing." Like many Silicon Valley law firms that served start-ups during the dot-com boom, Fernandez accepted equity for fees and has cashed in big from some of his start-up clients that have gone public, such as Marvell Technology Group Ltd. and SiRF Technology Holdings, Inc.
Fernandez is also dabbling in patent enforcement, building his own portfolio of patents covering GPS navigation systems. He is suing General Motors Corp. and others for infringement (claiming that the patents he filed eight years ago cover GM's OnStar navigation system).
Away from the high-tech world, San Francisco attorney Brooke Oliver also has managed to leverage her expertise-in an arcane federal law, the 1990 Visual Artists Rights Act-into a thriving small practice. In 1998 she handled one of the first cases brought under that statute, which gives muralists rights to preserve their public art from destruction. Through her work for nonprofits, Oliver ended up representing the family of the late artist Jesus Campusano. His huge, bright "Lilli Ann" mural, a four-story work which had been a fixture in the San Francisco Mission District since the city commissioned it in 1986, was whitewashed overnight by the new owners of the building on which it was painted. By the time the dispute settled in 1999 for $200,000 (considered the highest amount ever paid at the time for such a claim based on the federal statute), Oliver had already made a name for herself in the tight-knit community of artists in San Francisco.
Today, Oliver's firm, Oliver-Sabec, has four attorneys and represents over 200 artists, photographers, and arts organizations. Oliver has practically cornered the market on litigating cases on behalf of muralists around the country whose works are being threatened by developers and property owners ignorant of public art law. The firm's reputation in representing artists has also attracted corporate clients such as Sony Computer Entertainment, Princess Cruises, and online stock art company Corbis, founded by Bill Gates. "We got a lot of press coverage for our initial work, and if you do a good job for one person and do something unique and creative, people hear about it," Oliver says.
Recently Oliver brought in partner Jacqueline Sabec, an entertainment lawyer from Los Angeles, to expand the firm's music business. Sabec, who is also a musician, represents mostly independent music bands and live performers with a social or environmental agenda. "Big-firm entertainment lawyers don't tend to represent people like my clients, who have a real tendency to want to do good with the music they create," Sabec says. "Most of them come to me through referrals. It is a small community, and they tend to trust people who believe in what they do."
Micro-boutiques can flourish in the sciences as well. Pharmaceutical Patent Attorneys is a six-lawyer New Jersey firm with two lucrative niches: appealing rejected patent applications and challenging issued patents at the Patent and Trademark Office. Carlos Dentis, a former in-house counsel at Sterling Winthrop, Inc., now a division of Sanofi-Aventis, founded the firm in 1998 as a solo practice. In 2000 he brought in his former colleague at IP firm Fish & Neave, Mark Pohl, then an in-house counsel at Wyeth Inc., to help position the firm as a patent prosecution shop for Big Pharma clients. But instead of merely drafting patent applications for pharmaceutical companies, the pair found themselves succeeding at more specialized work.
Appellate work at the patent office is considered a better paying gig than regular prosecution work, according to Pohl. An appeal brief could cost $30,000-$40,000, compared to a flat $15,000 fee for writing a patent application. And since patents are so central to their business, drug companies are more zealous about fighting patent office rejections than most patent applicants. "They don't want their patents narrowed," Pohl says.
A patent reexamination request is also considered high-end work, and such filings are becoming more popular as a legal strategy. Companies facing or expecting patent infringement claims try to get that patent invalidated by the PTO. Legal fees for a patent reexamination request, which can run 300 pages, could be as much as $250,000. "We consider it professional malpractice to ask for reexamination for someone else's patents by filing a two- or three-page brief, like a law student memo," Pohl said. "When we file our request for reexam, they look like and smell like and quack like a federal court motion for summary judgment."
So far, Pohl has been batting 1,000, winning all the 16 reexam cases he's handled since he started the practice five years ago. His most recent win was for USV Limited, based in Bombay. The pharmaceutical company wanted to launch a new time-controlled diabetes drug but found a similar patented product in the market. The company hired Pohl in January 2005 to file a reexamination request at the patent office and try to invalidate the patent, which was owned and licensed by the University of Oregon. In July 2006 Pohl, after a vigorous fight with the university's attorneys, succeeded in persuading the patent office to invalidate the patent. "The university really fought like the dickens," Pohl says. The decision is considered final as of the first week of June, when the university missed a deadline for filing an appeal, according to Pohl.
Reexamination work now is 70 percent of the firm's practice. The firm represents 14 of the 20 largest generic pharmaceutical companies in India. "We tend to turn away work, and we charge no less than a big firm would charge," Pohl says.
Of course, there are no shortcuts to being recognized as a specialist. Developing a reputation takes time and a lot of hard work. Like Oliver, those who become successful have created deep ties to the community they are targeting. Melvin Owen, of Owen, Wickersham & Erickson in San Francisco, for example, has over decades established a reputation as the trademark guru for the California wine industry. "My father was quite active in various wine organizations, and enjoys wine, and over time built up that side of the business," says his son Greg Owen, who practices with his father and heads the six-attorney firm specializing in trademarks and copyright matters. "A lot of wineries are small businesses, and individuals just feel more comfortable dealing with a small firm like ours." The firm currently counts 300 wineries among its clients.
But success also has its challenges. The biggest one that most tiny specialist firms face is staffing. "We can't pay the huge salaries that the big firms are paying," Oliver says. Instead, Oliver's firm, which now has only one associate and regularly relies on summer interns, lures help by promising flexible hours, great training, and direct client involvement. "You'd be surprise at how many people are attracted to the promise of experiencing the humanity of day-to-day client contact," Oliver says.
Fernandez's firm also uses a steady stream of law school interns and engineering students. Most of the interns, unlike their big firm counterparts, are paid on the basis of per-formance. "Those who do good work get paid," Fernandez explains. And instead of employing associates, he lowers his costs by recruiting Ph.D. graduates and top college graduates with science and engineering degrees who are thinking of becoming attorneys or patent agents. They do patent infringement research or help in due diligence work. The firm also maintains offices in India and the Philippines and sends some of its technical and patent work there. "There are clients who are still wary of outsourcing their patent work [to foreign workers], and if they specifically request us not to outsource, we don't," Fernandez says. "But the people we hire in those countries are trained in the best schools there, and I'm pretty confident of their skill set."
Pohl's firm survives without any associates by investing in the training of its paralegals. "You really don't need an Ivy League attorney to do the job," Pohl says. Attorneys at the firm train the paralegals to be familiar with the PTO Web site and e-filing system, helping them to master the "nuts and bolts" of filing patent and trademark applications, including formatting applications and tracking filing deadlines. "Unfortunately, there's no paralegal school that teaches these skills," Pohl says. The firm also requires its clients to do most of the legwork. "We push a lot of the work back to the client, and we give them instructions," Pohl explains. "When they come to us, they come with a very strong body of scientific research."
Still, niche work is not for everyone, nor for every specialty. Chicago attorney Michael Baniak recently closed his 12-attorney IP litigation boutique after eight years. The firm focused on handling IP litigation for small and midsize companies and averaged a dozen cases a year. "It was a lot of fun initially," says Baniak, who worked for a big firm for 14 years prior to founding his own firm. But, Baniak explains, "I wanted to do bigger cases, and we had to turn away all big-ticket litigation because we didn't have enough resources." In January, Baniak moved with four other attorneys to 58-lawyer McDonnell Boehnen Hulbert & Berghoffhe. (The other lawyers at his former firm are each hanging out their own shingle.)
For now, Oliver is content where she is. All she ever really wanted to do after law school was to represent artists, and now the work pays well enough to subsidize her other passion: nonprofit activist work for more than half a dozen groups like The Dolores Huerta Foundation, which helps train community organizers, and San Francisco LGBT Pride Celebration, where she acts as general counsel. "I don't think big firms would let me work at a discount for some of my nonprofit clients," Oliver says. "Here I can do the work that interests me the most."
