By Erik Sherman
IP Law & Business/December 2007

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The Koreans sat, waiting. Lucas Elliot reached out with the chopsticks and grabbed the small octopus squirming on the plate. He heard the little pops as the octopus's suckers gave way. He pried the wriggling creature up . . . and thrust it into his mouth.

Elliot wasn't a gourmand searching for a thrill. This was business. "The clients laughed, and they just thought it was wonderful," says the Fulbright & Jaworski IP litigator. "They knew we don't eat that kind of food-I think that endeared me and my partners to them, that we were willing to try it, at least."

Lawyers who practice IP in the United States have more reason than ever to court Asian firms as clients-whatever the risk to their digestion. Companies from Japan, Taiwan, Korea, and even China realize the potential of IP protection here. And recently they've been heading to the U.S. to enforce those rights. Asian plaintiffs are showing up with increasing frequency in patent suits [see "Asian Companies Jump In", below], often suing other Asian firms. For instance, Toyota Motor Corporation went after Hyundai Motor Company in federal district court in Los Angeles in March, claiming that the Korean carmaker infringed its patents on automatic transmission technology. Taiwanese firm ASUSTeK Computer Inc. and Ricoh Co., the Japanese office technology giant, have been tussling over CD drive patents in federal courts in Madison, Wisconsin, and San Jose. A flurry of litigation over plasma TV displays was launched this past spring between Hitachi Ltd. and LG Electronics Inc. in the Eastern District of Texas.

All these conflicts require hiring an American law firm. But how do Asian companies pick among U.S. litigators? There is no magic formula. Consider the contrasting strategies of Morrison & Foerster and Fish & Richardson, which both boast an impressive roster of Asian clients. MoFo's office in Japan is 20 years old, and the firm also has offices in Hong Kong, Singapore, and Shanghai. (Opening a Shanghai office is a must-do for many firms, with Sheppard Mullin and Heller Ehrman announcing their debuts in that city within a week of each other in October.) But Fish & Richardson also has done extremely well in attracting Asian clients, and it has no offices in Asia at all. "Client development in Asia is about demonstrated capability and a demonstrated record of success," says F&R litigator Michael McKeon.

And the patience and the willingness to make a substantial investment of time and money. Compared to wooing an American company, the whole rhythm of the courtship is slow. Lawyers can literally spend years making periodic trips overseas, meeting the same prospects, going to dinner, and otherwise creating bonds that might-eventually-turn into revenue. Elliot remembers visiting one Taiwanese company every time he was in the country on other business. He met with executives for dinner, for lunch, for office-based discussions. "I did that every two months for two years," he says, "and finally we're starting to get significant work from them." Being available on the clients' schedule is a prerequisite. "That means a lot of flights to Asia and a lot of telephone calls at home in the middle of the night," says McKeon. "I've gotten e-mails at 11 P.M. to be on a call in 30 minutes."

The boom in Asian plaintiffs materialized over the past few years only because Asian companies have started to get over their traditional distaste for litigation. For instance, Japan has become far more tolerant about legal action, says Tracy Durkin, a partner in Sterne, Kessler, Goldstein & Fox who has a number of Japanese clients. Earlier this year she met with a couple of visiting professors from a Japanese law school. "There are brand-new law schools opening up in Japan because there's a huge shortage of lawyers," she says. "When I asked them why that is happening now, they said that as a society, Japan has become a lot more litigious, and there aren't enough lawyers to go around."

Besides, Asians see running to the courthouse as the American way. "The stigma that society might attach to litigation . . . is much different if [a company takes action] in the United States, because that's the way the crazy Americans resolve disputes," says Richard Kelly, a senior partner at Oblon, Spivak, McClelland, Maier & Neustadt, which has been doing business in Japan since 1969. With the U.S. representing about a third of the global market for many products, a plaintiff can find extensive leverage for arm-twisting. "Foreign companies have come over here saying, 'Maybe this is where we should be enforcing our intellectual patent rights,' " says Mike Bettinger, head of the intellectual property litigation practice in the San Francisco office of K&L Gates.

The U.S. legal system has some practical advantages. Discovery is a unique feature, making it easier to prove infringment. By contrast, says Harold McElhinny, cochair of the IP group at Morrison & Foerster, in Japan plaintiffs only have a chance of getting a specific document if they know what to ask for. What's more, there are no depositions.

But this warming trend to U.S. courts is possible only because of education and accumulated experience. "Ten years ago, [Asian companies] were very concerned about the prejudices of the U.S. jury," says John Rabena, a partner in Sughrue Mion's Asian practice group.

Sughrue goes to great lengths to make Asian prospects comfortable. In recent years the firm has taken mock trials overseas. Working with cosponsors, such as another law firm or a Japanese intellectual property association, it finds Americans resident in the other country, runs the trial, and then shows the jury deliberating over closed circuit television to audiences of executives that run from 100 to 1,000 people. Afterward, a Q&A session lets the businesspeople ask the jury questions.

Such tactics are apparently effective, and they had better be: The typical expense for Sughrue is $100,000, and that's with the cosponsor finding jurors and dealing with other practical issues. But one matter can turn the investment into a big money maker. For instance, Sughrue represented NEC Corp. in its litigation over wireless technology that resulted in 2005 in Harris Corp. taking a nonexclusive license.

As firms try to spread out beyond Japan, it's unwise to assume that what works in one country will also work in another. Each culture "has its own code of conduct and appropriate social graces," says Jim Durham, chief marketing officer of Ropes & Gray, which recently announced the opening of an office in Tokyo, its first in Asia. For instance, in Japan it's good manners to bring a soup bowl to one's lips and sip from it, while in Korea, says Durham, such a move is taboo.

A small mistake won't generally spell doom. "They know that we're Americans and that we don't know all of their cultural particularities," says Elliot. "I think unless you do something really stupid, they're relatively forgiving." That said, he has made a practice of researching cultural nuances before going to a new country: "the business cards, the greetings, so you don't make a complete fool of yourself."

Even with good manners, lawyers certainly can't expect the same hourly rates they can earn in New York or San Francisco. "China still is very price-conscious," Rabena says. There may be a lot of little-ticket work. Sughrue Mion trademark partner Kevin Smith has been conducting seminars and, most importantly, attending annual gatherings of the Chinese Trademark Association and meeting with its top officials. "I make a living filing trademark applications," in both China and the U.S., Smith says.

But getting a foot in the door can pay off. As in the U.S., trademark and copyright registration work can turn into more lucrative litigation. Vincent Chieffo, a shareholder of Greenberg Traurig, works with Silverlit Toys Manufactory Ltd. of Hong Kong, maker of a radio-controlled helicopter (the smallest in the world, according to the Guinness Book of World Records). Because patents on toys are difficult to obtain, Chieffo advised a different approach: He helped Silverlit register a U.S. copyright on the helicopter as a three-dimensional visual artwork, as well as filing trademarks and copyrights on the packaging and the product manual.

Before too long, a U.S. online retailer, Hobbytron, arranged for a knock-off of the helicopter to be manufactured in China, including a similar manual and packaging. So it was off to federal district court in northern California last December. "I didn't have to say a word," Chieffo says. "We stood up, and the judge turned to the defense lawyer and said, 'I want to talk to you.' " Silverlit received an injunction against Hobbytron selling its copies and, not too long after, a $200,000 settlement. That translates well into any language.