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In Depth: Tech Austin
} From the July 28, 2000 print edition

Demand for IP services `explodes' at law firms

Cindy Royal   Special To The Austin Business Journal

Austin law firms are beefing up their intellectual property practices to meet the diverse, unique demands of the growing high tech community.

"Austin is a hotbed of law and e-commerce activity," says Emerson Tiller, co-director of the Center for Business, Technology & Law at the University of Texas.

"Austin dot-com firms are looking for competitive advantage through the patenting of Internet business methods, copyright protection of Internet software and trademark protection of brand identity through domain names."

The demand for intellectual property services has made it the hottest growth area in law. A survey by The Affiliates, a legal staffing firm, indicates 58 percent of attorneys think intellectual property is the area of law that's growing the fastest. Nowhere is that trend more evident than in the tech-heavy Austin economy.

"I've been in my practice for about 10 years, and during that time, things have just exploded in Austin," says Don Jones, president of the Austin Intellectual Property Law Association and an attorney at Graves Dougherty Hearon & Moody PC.

"Ten years ago, there were only a few dozen members in the AIPLA. Only a few firms and some big companies like Motorola and IBM had intellectual property specialists. Now there are 200 registered members in our organization and a lot more out there that are not members."

The AIPLA provides continuing education programs, luncheons and networking opportunities for IP professionals.

Tremendous growth means big opportunities for attorneys with the right qualifications. A patent attorney is required by law to have a technical degree in science or engineering in addition to a law degree. A knowledge of business practices and technology is helpful for all attorneys practicing intellectual property law. And because of the global reach of the Internet, a familiarity with international law is necessary to round out a practice.

But staffing an IP practice can be a challenge. Not many law school graduates possess the diverse qualifications that are in such high demand. Those who do command a premium in the marketplace. Compared with the average annual starting salary of $70,000 for first-year associates in the Austin/San Antonio area, it isn't unusual for an IP attorney to start at more than $100,000 a year.

"Intellectual property attorneys are in extremely high demand," Jones says. "Top students can go where they want to. It is difficult to find the people you need and to compete with those firms that have chosen to pay high starting salaries."

IP law protects the intangible capital of companies. For software and Internet companies, these intangibles comprise their ultimate worth.

"It is impossible now to ignore the effect that technology has on the international economy," says William Hulsey, partner in charge of the IP practice at the Austin office of the California-based law firm Gray Cary LLP.

"Where does the value of companies like Microsoft come from? It's not the hard assets. It's not the money that has been invested in the company. If you look at the revenues of Microsoft, they are good but they are not any stronger than the top 100 or so companies, but their market capitalization is tremendous. That's the power of intellectual property."

Hulsey describes IP law as being analogous to protecting ownership rights in the real estate environment.

"In ownerships issues of trespass, leasing and licensing, property laws respect people's rights in owning real estate," Hulsey says. "Leases and grants are to real property what patents and trademarks are to intellectual property. Once people understand that, they understand what intellectual property law is about."

Gray Cary opened its Austin office in January 1998 with a commitment to serving the technology community. At that time, Hulsey was the only attorney in the IP practice. Today, the practice has 14 attorneys, including the addition July 8 of James Cannon, the firm's first Austin-based patent litigation attorney. Cannon comes to Gray Cary from Akin Gump Strauss Hauer & Feld LLP, where he was head of the litigation and technology practice.

IP attorneys assist clients with a variety of services, including domain name selection and protection of trademarks. The Internet has significantly raised the value and importance of trademarks, Hulsey says.

"For some Internet sites, a trademark is as much as 50 percent of the value of the site," Hulsey says.

"Amazon.com doesn't have brick and mortar. Yahoo is not known by its people. They don't have anything but their Web sites, and most of the recognition of the Web site is associated with their trademarks. The trademark measures immensely in the recognition of that site in the mind of the consumer."

Part of what's driving business for Gray Cary and other firms with IP practices is the patenting of new products and processes.

According to the U.S. Patent and Trademark Office, Austin ranked 13th in the United States with 1,571 patents granted in 1999, up 9 percent from 1998. The University of Texas alone issued 98 patents in 1999, ranking third among educational institutions granting patents.

And more patents mean more patent disputes. According to the federal court in Austin, 16 patent lawsuits were filed here in 1999, more than double the number in 1998. Many companies find Austin the ideal environment for trying complex patent suits that require not only judges to be technologically aware, but juries to understand the nuances of technology and the Internet.

"The jurors in Austin tend to be more educated than in other jurisdictions because of the university here and the expansion of corporate growth," says Wayne Harding, managing attorney in charge of the intellectual property practice at the Austin office of California-based Brobeck Phleger & Harrison LLP.

"There is more attraction of master's degree- and Ph.D.-type people in the Austin area. You have a likelihood of having an intelligent jury in your cases here."

In Austin, Brobeck has 17 IP attorneys divided between two groups. The intellectual property group focuses on patent prosecution and litigation, and a separate Internet group specializes in transactions such as applications for patents or trademarks. The majority of the growth in the practice area has occurred in the past two years, and Harding says he thinks that trend will continue.

"One year from now, we will have seven or eight more intellectual property specialists," Harding says.

CINDY ROYAL is an Austin-based freelance writer.

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