Ask an attorney who specializes in intellectual property (IP) law just about any question, and the answer is likely to be the same. Should a company file for a patent? It depends.
Should a business file for an injunction to stop unauthorized use of a trademark? It depends.
But one question isn’t getting the stock answer these days. How’s business for intellectual property lawyers?
“I’m busier than I’ve ever been,” says Michael McCue, a partner with Lewis Roca Rothgerber Christie in Las Vegas who specializes in trademarks, trade names and copyrights. McCue isn’t alone.
Lawyers across the spectrum of intellectual property law are staying in their offices later in the evenings to handle a surge of business, and lawyers from elsewhere in the nation are moving to Nevada to take part in the action.
Growth and diversification of the Nevada economy play an important role in the growth of law firms’ IP-related business, says Seaton J. Curran, an attorney with Howard & Howard in Las Vegas who specializes in patent cases.
Manufacturers seek patent protection on new products, marketing-related companies protect trademarks and trade names and the development of a community of creative professionals (including filmmakers) across the state increases demand for copyright-related legal services.
McCue agrees the growing number of businesses in the state naturally results in more IP work. Every business, after all, has some intellectual property, even if it’s nothing more than its name.
But he says his practice also has grown as business owners and managers become more aware of the value of intellectual property and the need to protect it.
“There’s a much greater awareness of IP than there used to be,” McCue says.
The busy trade-show calendar in Las Vegas also contributes to the growth of IP-related legal work.
McCue explains that companies exhibiting at a Las Vegas trade show are likely to notice when a competitor appears to be infringing on a trademark or “trade dress,” the distinctive visual appearance of a product. (Think of the shape of a bottle of Coca-Cola.) If the infringement takes place in Nevada, the legal action is filed here.
Law firms in Nevada also generate some IP work because they are close to California, but prices for legal work in Nevada tend to be lower than they are in the Golden State, McCue says.
Adds Robert Ryan, a partner and patent attorney with Holland & Hart, “Local and out-of-state businesses are gaining confidence in Nevada IP counsel.” He says the growing reputation of the William S. Boyd School of Law at UNLV contributes to the stature of IP firms in the state.
The boom in intellectual property law isn’t necessarily reflected in the filings of trademarks and trade names at the office of the Nevada Secretary of State.
“The filings and active marks have remained relatively stable for the past three years,” says Scott W. Anderson, chief deputy secretary of state.
The number of trademarks filed in Nevada during 2018 — 1,520 — was barely more than 2 percent higher than the number filed in 2016. The 2,027 active trade names in use during 2018 reflected a 2.6 percent decline from the 2016 level, although active trademarks increased to 2,003 from 1,840.
That’s not entirely surprising, says McCue, because a trademark filing in Nevada covers only this state. A company that expects to have a multi-state presence — which is common in the Internet age — generally opts instead for federal registration, which covers all 50 states.
While the statistics may not tell the story, activity in intellectual property in Nevada hasn’t gone unnoticed by lawyers around the country.
Mat Trachok, an associate in the business entities and transactions group of McDonald Carano in Reno, is among those who recently set up shop to handle IP work in Nevada.
Trachok returned to Reno — he grew up in Nevada — late last year after providing legal counsel to technology firms and other business clients in Boston for six years.
“I don’t know that I would have moved back even a few years ago. Now the opportunities here seem to be expanding quite quickly,” Trachok says.
In fact, the Intellectual Property Section of the State Bar of Nevada, which numbered only a couple of dozen lawyers not that long ago, today has grown to 133 attorneys.
The Right Fit
Even within that legal specialty, IP attorneys often specialize even further.
The protections available for intellectual property, Trachok says, fall into four general categories: patents, copyrights, trademarks and trade secrets. A company also may be able to impose contractual protections on confidential information that it discloses to others.
The right mix of protections, he says, depends on the industry and the company.
Patents, for instance, provide protection for 20 years — but then the protection disappears. Further, an application for a patent requires that the inventor provide public disclosure of the patented invention that others might be able to design around during the patent’s life or exploit after the patent expires. Each company needs to work with its legal counsel to create the right portfolio of protections.
It is far better, intellectual property attorneys say, if companies move sooner than later to protect their IP assets.
The need for IP protection sometimes gets overlooked — or put off — by founders of startup companies who are juggling production development, sales and marketing, finance and numerous other issues.
“Protecting intellectual property assets is not always in the forefront of their minds,” says Curran.
But moves by a competitor — say, the possible introduction of a knock-off product that threatens a profitable line of business — will focus the attention of business owners who haven’t given priority to IP protection.
“Protection of IP can be expensive,” Curran acknowledges. “But I always want to make sure that clients understand the value they can receive from IP protection.”
Clients, who generally aren’t specialists in intellectual property, need to work closely with their attorneys.
“Wise protection of IP requires understanding what IP is and making budgeting decisions about where to spend IP dollars and when to hold back,” says Ryan. Investment in protection of intellectual property, he says, often creates value that can become part of the owner’s exit strategy and captured when the business is sold.
Clients particularly need to understand the need to move expeditiously. Once a new product is introduced, for instance, U.S. Patent Office rules require that the patent application begin within a year.
Protection of trade names and product names also needs early attention.
Fledgling businesses commonly skip a nationwide check to see if the names of their firm and its products already are in use elsewhere. That’s not smart, says McCue.
“It’s wise to invest what could be just a few thousand dollars in a search,” he says. “It will be much cheaper to do it on the front end than to change everything later. The best economic decision is to do it early.”
Adds Trachok, “If intellectual property is central to your competitive edge, it’s going to be one of the most fundamental things that a company wants to address at the very beginning.”
Clarity is Key
It’s critical, Trachok says, that new companies have either clear ownership or clear licensing agreements for the intellectual property that they need. Sometimes, the company may need the arrangements to provide for exclusive use of IP. Other times, it may be sufficient for the arrangements to simply allow for its use.
If founders of a new company developed IP at a previous job, or during a contracting stint with another organization, the company needs to clearly establish its rights to use the IP. The possibility of tainting the company’s own work through the use of confidential information gathered from previous employment, or learned from outside individuals or entities under obligations of confidentiality, creates a high risk.
Equally important are agreements that prevent the current employees and contractors of a company — even a startup — from taking the company’s IP with them to a new position. Strong confidentiality and IP assignment agreements are a must from the start, Trachok says.
On the other hand, Curran says not every product idea necessarily requires protection.
“Trademarks don’t sell products,” he says. “Patents don’t sell products.”
If the idea is unlikely to be translated into a profitable business idea, IP protection provides little value.
That’s why it makes sense, Curran says, for business owners and managers to understand how a product will make money, and how the product fits into the strategy of the business, before they invest money into IP protection.
“The business needs to drive the IP protection,” he says.
When to Act
Those same business needs also should be the primary consideration when business owners weigh legal action concerning possible infringement of a intellectual property asset.
Enforcement through the courts can be expensive, aggravating and time-consuming. But enforcement may protect intellectual property at the very heart of a profitable business.
“You need to decide how much you are going to spend as opposed to the value of the IP,” Curran explains.
Because trademarks lose their value if they become generic terms in general use, owners of trademarks tend to be fairly aggressive in addressing infringement.
“There’s a risk that if you don’t enforce your rights, they can become weaker over time,” McCue says.
Enforcement can be as inexpensive as a stern note on the letterhead of a law firm or as costly as sprawling litigation. Not every infringement is worth the trouble of enforcement.
“When decisions to enforce are emotional, rather than rational, that’s when businesses get in trouble,” says McCue.
Along with the costs of litigation, Trachok encourages clients to think through other considerations:
The possibility that the defendant could launch a counter-attack that might impair the value of the IP. For instance, the defendant could respond to a patent-infringement suit by arguing that the patent wasn’t valid in the first place.
The risk to the clients’ reputation if the public views the legal action as an attempt to stifle competition or keep prices high unfairly.
The beneficial possibility that even if the legal action isn’t entirely justified by a cost-benefit analysis this time around, it may scare off others who might infringe on the IP.
Litigation isn’t always the answer, Curran says. Arrangements such as licensing the use of a patent may resolve infringement issues.
An Evolving Specialty
All of the specialties within the category of intellectual property law continue to evolve.
Patent law, which is entirely under the oversight of the federal government, has been changing consistently in recent years with Supreme Court rulings and new Patent Office procedures, says Curran.
“It certainly isn’t a static area of the law,” he says. “It’s constantly evolving.”
For instance, Curran notes that patent experts continue to struggle to determine whether computer applications and smart-phone apps are eligible for patent protection. Abstract thought, judges have ruled, can’t be protected by patent. But is computer software made up only of abstract thought and words? Or do those abstractions create a product that can be patented?
The explosion of social media brings a whole new basket of issues to be sorted out by IP lawyers.
What happens, for instance, when someone decides to use a trademarked brand name as part of their Twitter handle? What happens when a copyrighted photo is used in a Facebook post? There aren’t any easy answers.
“The law still is evolving in the social media space,” says McCue.
Resolution of intellectual property disputes that involve social media also can become complex.
A client who believes that company secrets have been misappropriated can go to a judge, request an injunction and seek financial damages, Trachok explains.
But if a secret is broadcast on social media — even inadvertently — it’s far more difficult to stuff the cat back into the bag, and some remedies may no longer be practicable. The danger is particularly noteworthy for inventors who carelessly disclose their ideas on social media, only to learn that the publicity may prevent issuance of a patent later on.