Now that it appears that we are in a recession — and there’s no good way to nuance that anymore — what does is mean for the legal profession? The legal area was once considered recession-proof with some areas even going up as companies focus on competitors.  Now, the demand for legal services is certainly going to change.

Bruce MacEwan, over at Adam Smith, Esq., compares the current legal business to Motown’s Big Three.  Citing reader Brent Jeffcoat, of McGuire Woods’ Charlotte office, he questions if law firms need a bailout:

After all, think of all the people we affect: our young associates marry and live in condominiums in urban centers.  We probably support Starbucks.  Allen Edmonds is toast. … Think of all those poor guys in Scotland who will not be able to sell their single malt whiskeys.  It would be a global crisis of unimaginable proportions if one or two of the AmLaw 100 were to fail.

Now, the ABA Journal is surveying lawyers about the job market and the current state of the economy.  Specifically, they want to know how you think the recession will affect the legal profession.

Please click below to take the two-minute survey. The survey results will be published in the January issue of the ABA Journal. Your answers will be kept confidential, and used only in combination with all other responses received.

Take the quick survey here.

Note to non-lawyers:  No, entering law school is not a smart way to deal with the terrible job market, as you and the other 100,000 students graduate en masse in three years creating a glut of new associates in the market.

cul·ture (n.) the set of shared attitudes, values, goals, and practices that characterizes an institution or organization (Merriam-Webster’s Dictionary Online).

The book “Intellectual Property Culture: Strategies to Foster Successful Patent and Trade Secret Practices in Everyday Business” by Eric Dobrusin and Ronald Krasnow is much better than its bland title or cover would belie. This is a book that weaves together deeper ideas on what principles should guide a company with specific details useful in day-to-day practice.

It is not just about the management of intellectual property assets, it is about creating a culture within an organization that recognizes that intellectual property is essential to the very livelihood of the business and knowing how to proactively protect IP assets.

Over the course of its 392 pages, Intellectual Property Culture delivers an excellent guide for any organization that deals in knowledge and technology.  The guiding principal is that any organization that wishes to survive in the knowledge economy must develop an IP culture:

To thrive in the knowledge economy, organizations must cultivate attitudes and behaviors that recognize IP, respect IP, and trade upon the value of IP.  This needs to be done organically, within each individual organization, and to meet the specific needs and characteristics of each such organization.

The trick, of course, is to develop a “healthy IP culture.”

The book is also stocked with practice tips valuable for businesses of all sizes.  In discussing confidential information and effective corporate trade secret programs, the authors note:

While many organizations spend a great deal of time seeking to Protect against intentional taking of confidential information by third parties, often the greater risk lies in the accidental disclosure of confidential information by its own personnel.

Filled with illuminating examples and anecdotes from the authors’ real-world experiences, the book contains valuable practical advice along with sample agreements, notice letters, employee training materials, patent status reports, IP policies, questionnaires, timelines, and other resources. Even the Appendices add niceties such as sample laboratory notebook usage guidelines and a policy and form for review and approval of information prior to disclosure.

About the Authors

Eric M. Dobrusin is a founder and shareholder in the law firm of Dobrusin & Thennisch, where he has concentrated his practice in patent counseling and strategic patent prosecution.

Ronald A. Krasnow is the Senior Vice President of intellectual property and Chief Patent Counsel at Relypsa, Inc., in Santa Clara, California, where he is responsible for all legal functions, including corporate, contract, and intellectual property.

“Intellectual Property Culture: Strategies to Foster Successful Patent and Trade Secret Practices in Everyday Business”
Oxford University Press, USA, is available on Amazon.

There are a number of patent search sites available today.  A new one is a semantic patent search — searching by meaning or interpretation of terms — called Setrue Semantic Patent Search Engine by Transformer.

Setrue touts itself as an answer to the growing need of patent search market to a search engine with semantic capabilities that will enhance the precision of search results as contrast to the current FTS engines (full text search engine).

Currently, the engine contains patents and patent applications from the USPTO — EPO patents with weekly updates and more databases will be acquired in the near future. Setrue Semantic Patent Search system includes:

1.    A natural language query capabilities.
2.    Query auto-complete suggestions.
3.    A detailed class directory structure enabling a one click segmentation of search results to a specific patent class.
4.    A dynamic clustering of search results by classes
5.    A dynamic clustering of search results by years
6.    A dynamic clustering of search results by assignees.
7.    Similar patents segmentation.
8.    A dynamic weighting of search terms
9.    Highlighting of search terms in documents
and more.

Setrue claims its mission is to strengthen the online connection between inventors/entrepreneurs/companies and the professional IP service providers like law firms and individual attorneys.

But Setrue seems to also be in competition with those same professional services providers by offering expert patent searching, patent opinions and even provisional patent filings (as we’ve mentioned with other providers using this model, we’re not sure everyone would understand all the trade-offs of provisional applications).

Setrue’s business model is not based on advertisements but is based on dividing its potential target audience into two groups:

The first one is the professional audience including law firms, private lawyers, patent search agencies, litigation lawyers and corporations that will be asked to acquire a license deal that will include a commercial license to use the search system, targeted advertisement and redirection of patent services requested by inventors.

The second target audience is the private inventors, entrepreneurs and companies that get free usage of the system, access to professional services offered by the site’s professionals, and direct access to professionals’ sites.

You can try it yourself here:

See the Setrue Semantic Patent Search Engine here.

As of July 2008, twenty-five states and the District of Columbia have filed antitrust suits against Abbott Laboratories and Solvay’s Fournier Industrie et Santé and Laboratories Fournier in Delaware District Court, charging them with blocking generic competition by engaging in product hopping, among other “anti-generic strategies.”  Patent Baristas reported the initial filing here.

As Stephen reported: “According to the AGs in the states, the companies made trivial changes to the formulations of TriCor, and marketed those while withdrawing the original drug from the market. The companies deleted references to the original forms of the drug from national drug databases, according to prosecutors, making it more difficult for a generic version of TriCor to obtain generic status.”

This product hopping amounts to little more than a thinly disguised scheme to game the pharmaceutical industry’s regulatory system. It entails introducing a product change that serves little purpose but to impair generic competition and reduce the market for generics.  But product hopping is not an easy target for antitrust enforcement.  Brand name manufacturers are under no legal duty to help their generic competitors by curtailing formulation changes that broaden the selection of prescription drugs on the market and may better meet consumer preferences.  Most importantly, generic manufacturers remain free to enter the market and sell versions of the old formulation under their own separate brand name. That rival brand name manufacturers are more powerful competitors — engaging in successful advertising campaigns and directing consumers to the new formulation — falls short of an antitrust violation.

But there might be a way around this.  The Supreme Court’s 2004 decision in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko emphasized the importance of attention to an industry’s regulatory regime in determining the role of antitrust law and suggested a possible “expansion of the contours” of the Sherman Act in certain regulatory contexts. Trinko may have interesting implications for antitrust enforcement in the pharmaceutical industry which, though heavily regulated, lacks an industry regulator that polices competition.

As Trinko noted, the role of antitrust law in a heavily regulated industry depends on whether “the [regulatory] regime is an effective steward of the antitrust function.”  Two Supreme Court decisions represent the extremes of antitrust law’s role in a regulated industry: (1) where unsupervised private firm discretion dominates the market and any regulatory intervention fails to police competition, as in Silver v. New York Stock Exchange, antitrust law has an active role to play, and (2) where anti-competitive conduct is thoroughly policed by the industry’s regulator,” as in Trinko, antitrust law has been ousted from its role as the guardian of competition.

In the pharmaceutical industry, while the FDA goes to great lengths to regulate drug safety and efficacy, it deliberately avoids regulating competition in the pharmaceutical industry.  According to the FDA’s stance, “the whole point of the [Hatch-Waxman] Act’s [ANDA IV] scheme is to let private parties sort out their respective intellectual property rights [and the market exclusivity they confer] through patent infringement suits while the FDA focuses on its primary task of ensuring that drugs are safe and effective.”  Since anti-competitive conduct would easily slip under the pharmaceutical industry’s regulatory radar, the industry’s regulatory system accordingly leaves ample room for antitrust law to intervene with full force, rather than squeezing it out.

Unlike in Trinko’s telecommunications industry, antitrust law has a role to play in the pharmaceutical industry.  In dicta, Trinko recognized the possible “expansion of the contours of [Sherman Act] § 2″ depending on the regulatory context.  An article by Professor C. Scott Hemphill proposes that the application of antitrust law to the heavily regulated pharmaceutical industry depends on the regulatory regime itself, particularly “its role as a congressional judgment about the proper balance between [policy goals] and competition.”  Such enforcement of the Sherman Act extends beyond policing ordinary market antitrust concerns to condemning conduct that directly undermines the specific type of competition the legislature sought to establish in fashioning the regulatory system.

The relevant regulatory system in the context of product hopping is a regime of state drug product selection (DPS) laws.  Today, every state has passed DPS laws that allow for generic substitution, though the specific provisions vary state by state.  Where a physician prescribes a brand name drug, generic substitution under state DPS laws allows pharmacists to fill that prescription with a generic equivalent.  DPS laws reflect a legislative decision to contain prescription drug costs through generic substitution, sacrificing even-footed competition between brand name manufacturers and their generic rivals.

Disfavoring the unfettered market competition of other unregulated industries, states recognized that the forces of competition don’t map on well to the prescription drug market where the customer pays but doesn’t choose, and the physician chooses but doesn’t pay.  DPS laws accordingly sought to establish a specific type of generics-favoring competition between brand name manufacturers and their generic rivals: Though brand name manufacturers may succeed in winning the prescription of physicians, there must be a choice at the pharmacy-level to fill that prescription with a generic version (unless a prescription indicates the physician’s unwillingness to permit substitution).

In this light, the real anti-competitive harm from Abbott and Fournier’s product hopping is straightforward.  In each hop, Abbott and Fournier, without justification, contacted First Data Bank and set in motion changes that ultimately prevented pharmacists from substituting prescriptions for older formulations with their generic equivalents.  This strategy stopped generic substitution that should — and would — have taken place under DPS laws.  This obstruction is the real harm Abbott and Fournier’s product hopping inflicted on competition:  They impermissibly undermined the specific type of generics-favoring competition state legislatures sought to establish in fashioning DPS laws and accordingly raises compelling regulatory antitrust concerns.

This is a summary of an earlier Law Review Note “An Antitrust Analysis of Product Hopping in the Pharmaceutical Industry,” 108 Colum. L. Rev. 1471.  See the full Note here.

This post was contributed by Guest Barista Jessie Cheng, currently a 3L at Columbia Law School.

Doug Lichtman, a Professor of Law at UCLA, has alerted us to the fact that he sat down this past weekend with Professor Rob Merges from Berkeley and Professor John Duffy from GW, and they recorded a one-hour audio podcast about Bilski.  They have posted it for free, and in downloadable form, on the Web.

In going through the decision, Rob and John have helpful perspectives, not only because they are prominent patent academics, but also because they were each involved in the case and, indeed, Duffy was one of the four lawyers invited to present oral argument.

Special Offer:  Just to make things better for listeners, any lawyer who listens can get CLE credit (again, for free!) in New York, California.  They are expecting to be able to add Ohio, Illinois, Texas, Delaware, and Washington state.

The audio is part of an on-going series of intellectual property podcasts Professor Lichtman is doing with senior academic and industry guests.  At the site is an archive and a list of future programs, in case you are interested.  All are free, downloadable, possibly interesting, and come with the CLE, too.

What more could you ask for?

Check out the Bilski show at the IP Colloquium website here.  The Bilski audio is the featured audio on the splash page.

Also see:  How Did We Get to Bilski and What Can We Do About It?

In the ten weeks between the election and the inauguration, we will have plenty of time to ponder what changes, if any, might be in store for the U.S. Patent and Trademark Office.  Many believe its interminable quest to improve so-called patent quality has led to a precipitous drop in patent allowances.

The question is, will there be some shift in policy that might ease the tension between the Patent Office and the patent community? First, we have to look at what the Obama administration might want to do.  According to an Obama campaign statement:

Reform the Patent System: A system that produces timely, high-quality patents is essential for global competitiveness in the 21st century. By improving predictability and clarity in our patent system, we will help foster an environment that encourages innovation. Giving the Patent and Trademark Office (PTO) the resources to improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation. With better informational resources, the Patent and Trademark Office could offer patent applicants who know they have significant inventions the option of a rigorous and public peer review that would produce a “gold-plated” patent much less vulnerable to court challenge. Where dubious patents are being asserted, the PTO could conduct low-cost, timely administrative proceedings to determine patent validity. As president, Barack Obama will ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration.

References to predictability and clarity in our patent system may signal a need to clarify issues with the obviousness standard set out by KSR. which has been made into a hammer by the Patent Office.  But then, there is that statement about wanting to “improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation,” which is a clear hat tip to the high tech industry.

It would be a shame if the a “gold-plated” patent scenario where to be implemented.  It would seem to amount to a stamp marking all other patents as “crap” patents. Better time and resources could be put towards the need for administrative proceedings to determine patent validity, if made to be truly low-cost and timely.

And what about the USPTO administration itself?  Currently, Jon W. Dudas serves as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).  He was nominated by President George W. Bush.

As Under Secretary of Commerce for Intellectual Property, Mr. Dudas advises the President of the United States, the Secretary of Commerce, and the Administration about intellectual property matters. As Director of the USPTO, he administers the laws of granting patents and trademarks and the day-to-day management of the $1.8 billion agency and its more than 8,900 employees.

Most likely, we will see Director Dudas leave his position by inauguration day since he a political appointee — appointed by the President after Senate confirmation. The Deputy Director is also a politically-appointed position (by the Secretary of Commerce)  but the previously embattled Deputy Director Margaret Peterlin has already announced her resignation.

Commissioner for Patents John Doll and Commissioner for Trademarks Lynne Beresford are appointed by the Secretary of Commerce for 5-year terms that are not tied to the date of election of the President. They may or may not bere-appointed when their terms expire.

Most likely, any changes will come slowly.  We’ll keep you informed.

Now that Barack Obama is the President-elect of the United States, what does this mean for patents and technology?  According to the agenda and philosophies posted on the Obama website, the new administration should pursue mostly a pro-patent/pro-technology agenda.

As the 44th President of the United States, Barack Obama will face many great challenges at home and abroad.  Tech will not necessarily be in the top three items on his to-do list and it will be difficult to say what programs will actually receive funding in the end.  However, the administration’s policies on Technology give us a glimpse of things we might see.

Improve America’s Competitiveness

• Promote American Businesses Abroad: Barack Obama and Joe Biden support a trade policy that ensures our goods and services are treated fairly in foreign markets. President Bush has failed to address the fact that China has engaged in ongoing currency manipulation that undercuts US exports; that China fails to enforce U.S. copyrights and trademarks and that some of our competitors create regulatory and tax barriers to the delivery and sale of technology goods and services abroad. Barack Obama will fight for fair treatment of our companies abroad.
• Invest in the Sciences: Barack Obama and Joe Biden support doubling federal funding for basic research over ten years, changing the posture of our federal government from being one of the most anti-science administrations in American history to one that embraces science and technology. This will foster home-grown innovation, help ensure the competitiveness of US technology-based businesses, and ensure that 21st century jobs can and will grow in America.
• Invest in University-Based Research: Barack Obama and Joe Biden strongly support expanding research initiatives at American colleges and universities. The U.S. faces a challenge in funding younger researchers. Obama and Biden will provide new research grants to the most outstanding early-career researchers in the country.
• Make the R&D Tax Credit Permanent: Barack Obama wants investments in a skilled research and development workforce and technology infrastructure to be supported here in America so that American workers and communities will benefit. Obama and Biden want to make the Research and Development tax credit permanent so that firms can rely on it when making decisions to invest in domestic R&D over multi-year timeframes.
• Ensure Competitive Markets: Barack Obama believes we need a business and regulatory landscape in which entrepreneurs and small businesses can thrive, start-ups can launch, and all enterprises can compete effectively while investors and consumers are protected against bad actors that cross the line. As president, Obama and Biden will reinvigorate antitrust enforcement, which is how we ensure that capitalism works for consumers.
• Protect American Intellectual Property Abroad: The Motion Picture Association of America estimates that in 2005, more than nine of every 10 DVDs sold in China were illegal copies. The U.S. Trade Representative said 80 percent of all counterfeit products seized at U.S. borders still come from China. Barack Obama and Joe Biden will work to ensure intellectual property is protected in foreign markets, and promote greater cooperation on international standards that allow our technologies to compete everywhere.
• Protect American Intellectual Property at Home: Intellectual property is to the digital age what physical goods were to the industrial age. Barack Obama believes we need to update and reform our copyright and patent systems to promote civic discourse, innovation and investment while ensuring that intellectual property owners are fairly treated.
• Reform the Patent System: A system that produces timely, high-quality patents is essential for global competitiveness in the 21st century. By improving predictability and clarity in our patent system, we will help foster an environment that encourages innovation. Giving the Patent and Trademark Office (PTO) the resources to improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation. As president, Barack Obama will ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration.
• Restore Scientific Integrity to the White House: Good policy in Washington depends on sound advice from the nation’s scientists and engineers and decision-making based on the needs of all Americans. Obama and Biden will restore the basic principle that government decisions should be based on the best-available, scientifically-valid evidence and not on the ideological predispositions of agency officials or political appointees.

See also:  A Second Look at President-Elect Obama’s Technology Platform (Patent Docs)

In a spate of recent articles, it would seem that the world has come to an end in terms of high-tech IPOs — not to mention venture backing of early-stage start-ups.  Because of the recent market turmoil, the M&A market has has come to a screeching halt and the window of opportunity for IPOs has shut completely.  Even angel investors are rethinking investment moves.

According to recent articles in Wired, VCs are mostly pumping money on hand into existing portfolio companies or in large, established start-ups that have already gone through several rounds of funding. What’s more, the slow down may hit the Midwest even harder.  Mirroring the regoin itself, Midwest VCs have are a lot more conservative in their investing than coastal investors.

Companies looking to secure financing are needing to look beyond venture groups to a variety of non-traditional sources such as hedge funds, retirement accounts, family trusts, deposed dictators, individual or angel investors.  Even the tried and true home equity route is shut down.

Reuters reported that the biotech industry has not seen an IPO since November 2007, when Nanosphere, which develops diagnostic tests, made its $113 million debut at the bottom of its price range. Since then, it is down 68 percent.  Those waiting in line are finding no exit. In the last two weeks, nearly half of the biotech companies in the IPO pipeline have dropped out.  Five biotech companies remain in the pipeline, with deals totaling $330.5 million, according to Thomson Reuters data.

All this is counter-intuitive.  Biotechs are companies that generally sell products — diagnostics and therapeutics — that are unaffected by market conditions.  Then why the long face for biotech start-ups?  The market is skittish about the length of time for return on investment and the prospect of huge returns.  Only seven of the 61 biotech companies to have gone public since 2000 are currently trading above their IPO prices.

So, what is selling?  Biotechs with products ready for market.  The venture spigot is off for early-stage companies including most any Phase 1 or Phase 2 stage company.  Right now, companies on the early side of the curve will need to look to doing more partnerships and mergers.

While all the doom-and-gloom strikes fear in many start-ups and entrepreneurs say that money just isn’t flowing, it could be that this is the perfect time to invest.  Start-up equity can be found cheap in this buyer’s market.  OK, admittedly you don’t get money for have an idea scratched out on a bar napkin just because it involves the internet and sock puppets, there’s still opportunities to be had.

The key to survival in this market — as it should be in all markets — is having a great management team and a low burn rate.

See more here:
Where Have All The Biotech IPOs Gone? (Pharmalot)
Biotech Facing a Long IPO Dry Spell (California Biotech Law Blog)

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