How Fish & Richardson has climbed to the top of our annual list of most active IP practices

Patent Litigation Survey go fish How Fish & Richardson has climbed to the top of our annual list of most active IP practices

2010 Patent Litigation survey An Unexpected Turn Work was steady for top firms last year, but judges started to rein in damages. By Joe Mullin Judging by the results of the 2010 edition of our annual Patent Litigation Survey, you might not guess that the number of patent suits filed in federal court fell last year. According to PricewaterhouseCoopers, though, that s just what happened: The number of new infringement claims brought in 2009 was down by 6 percent, compared to the 2008 total. But while there may have been less litigation work to go around overall, there was certainly plenty to keep the top law firms in our rankings busy. Consider Fish & Richardson, which snagged the top spot on our overall list again. In 2008 Fish handled a combined total (plaintiffs plus defense) of 77 cases. In 2009, the firm s total shot up to 99 cases a 29 percent increase. Second-place finisher Kirkland & Ellis saw its docket surge from 57 cases in 2008 to 72 in 2009, a 26 percent jump. All five of the top firms on the overall list Jones Day, Quinn Emanuel, Urquhart & Sullivan, and Howrey are the others benefited from one patent litigation trend that just won t quit: the ongoing flood of suits filed by nonpracticing entities (NPEs), or patent trolls. In fact, for several of the top firms, defending against Meanwhile, in the First STate... Delaware is home to one of the busiest federal districts in the country for patent litigation. For that reason, Delaware firms rack up substantial caseloads every year and 2009 was no different. As they have in the past, the midsize Wilmington-based firms Morris, Nichols, Arsht & Tunnell (82 cases; 31 defense, 51 plaintiffs); Richards, Layton & Finger (47; 27, 20); and Potter Anderson & Corroon (42; 25, 17) responded to our survey. While all three can, and do, handle patent cases on their own, they also often function as local counsel for out-of-town firms that file suit in Delaware. That s why we ve opted to recognize their efforts here, rather than include them on our main lists. J.M. NPEs accounted for more than half of their overall caseload. But while NPEs are responsible for many patent suits, disputes between competing companies which tend to drag on longer and generate more in fees than troll suits still make up the core of many top firms litigation business. The smartphone wars that flared up this year between Apple Inc. and rivals like Nokia Corporation and HTC Corporation, for example, may ultimately produce more fees for the firms representing them (Kirkland & Ellis and Wilmer Cutler Pickering Hale and Dorr, among others) than many patent troll cases combined. So the business of patent litigation is fundamentally solid. For further proof, consider data compiled by PricewaterhouseCoopers that shows damages awards in patent cases reaching a median of $9.3 million in 2009 not far off the alltime high of $10.6 million in 2001. Of course, a few extraordinary awards helped push up last year s median, including i4i Inc. s $290 million win against Microsoft Corporation, which the software giant hopes the U.S. Supreme Court will consider, and the even more eye-popping $1.8 billion awarded to Johnson & Johnson subsidiary Centocor Ortho Biotech Inc. for having the patent on its antiarthritis drug Humira infringed by Abbott Laboratories. Large awards like those don t just nudge the median higher. They grab the attention of everyone involved in patent litigation including judges, who have always been more conservative than juries in awarding damages. Now in an emerging trend with major implications for the firms that rely on patent cases those judges are moving to limit the size of awards by examining more closely the economic models on which they are based. The issue turns largely on royalty calculations. While they are often at the heart of patent damages cases these days, that wasn t always so. As recently as the 1980s, The Busiest s Overall 2010 2009 Name District Court 1 1 Fish & Richardson 99 2 2 Kirkland & Ellis 72 3 9 Jones Day 69 4 9 Howrey 51 5 3 Quinn Emanuel 49 6 - Orrick 48 7 5 Finnegan, Henderson 47 7 20 McDermott Will 47 9 12 Alston & Bird 45 9 7 Morrison & Foerster 45 11 29 Cooley 44 12 5 Niro, Scavone 39 13 14 Foley & Lardner 37 13 20 Winston & Strawn 37 15 20 Baker Botts 36 16 8 Wilmer 35 17 13 Greenberg Traurig 34 18 28 McCarter & English 33 18 25 Perkins Coie 33 20 31 Kilpatrick Stockton 32 20 9 Knobbe Martens 32 22 - Amster Rothstein 31 23 - Connolly Bove 30 23 16 K&L Gates 30 25 16 McKool Smith 29 26 27 Goodwin Procter 28 26 - Robins, Kaplan 28 28 19 Wilson Sonsini 26 29 23 Covington & Burling 25 29 37 Sidley Austin 25 31 34 Fitzpatrick, Cella 24 32 14 DLA Piper US 23 32 4 Kenyon & Kenyon 23 32 - Nixon Peabody 23 35 - Banner Witcoff 22 35 - Husch Blackwell 22 37 23 Fulbright & Jaworski 21 37 - King & Spalding 21

For the Defense 2010 2009 Name Defense 1 2 Fish & Richardson 62 2 1 Kirkland & Ellis 51 3 12 Jones Day 45 4 6 Howrey 40 4 12 McDermott Will 40 4 - Orrick 40 7 - Cooley 39 7 3 Morrison & Foerster 39 9 4 Quinn Emanuel 38 10 18 Winston & Strawn 34 11 7 Alston & Bird 31 11 11 Foley & Lardner 31 13 18 Baker Botts 28 14 12 Finnegan, Henderson 24 14 16 Greenberg Traurig 24 14 18 Perkins Coie 24 17 23 Goodwin Procter 22 17 - Kilpatrick Stockton 22 19 - Amster Rothstein 21 19 7 K&L Gates 21 21 - Sidley Austin 20 21 9 Wilson Sonsini 20 patent litigation and the damages it produced mostly involved battles between rivals trying to persuade judges and juries of the profits they d lost as a result of infringement. Today, the lost-profits argument is less prevalent than it once was. According to PricewaterhouseCoopers, lost profits accounted for 39 percent of damages awards in patent cases from 1995 through 2001; the figure dropped to 28 percent for awards granted between 2002 and 2009. That s partly explained by the rise of nonpracticing entities as a force in the patent litigation arena. Another factor: the increasing willingness of operating companies to try to cash in, via lawsuits and licensing, on patents that aren t generating revenue otherwise. The heavy reliance on royalty calculations in figuring damages has prompted judges to apply particular scrutiny to the so-called entire market value rule, which allows plaintiffs experts to claim damages for a patented invention based on the overall value of an infringing product, even if the patent at issue only covers a small piece of the product in question. And one judge in particular appears to be having a major influence in this area: Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit. In 2009, before becoming chief judge, Rader sat by designation on three district court trials, On the Plaintiffs Side 2010 2009 Name Plaintiffs 1 1 Niro, Scavone 39 2 2 Fish & Richardson 37 3 2 McCarter & English 32 4 - Jones Day 24 5 4 Finnegan, Henderson 23 6 5 Fitzpatrick, Cella 22 7 - Kirkland & Ellis 21 8 5 Wilmer 19 9 - Robins, Kaplan 16 10 - McKool Smith 15 two in Eastern Texas, the other in New York s Southern District. It s not unusual for appellate judges to spend time in trial courts, but many observers saw Rader s decision to visit East Texas still considered a plaintiff-friendly venue as telling. In one of the Texas cases, Rader threw out expert testimony backing patent-holding plaintiff IP Innovation, saying that the expert s report improperly inflates damages by using irrelevant or unreliable evidence. In the New York case, he sliced a $184 million award to Cornell University to $53 million, finding the royalty base on which the initial award was calculated too broad. Rader issued both rulings in March 2009, and patent practitioners say his apparent willingness to get tough on damages has already started to filter down into district courts. There s a noticeable effect on the high-tech side, says McDermott Will & Emery partner Yar Chaikovsky. The entire market value rule is applied much more vigorously. It s causing plaintiffs to search for other methods, and be much more creative in their damage theories. As if to drive the point home, the Federal Circuit issued an important damages ruling in September 2009 in connection with a longrunning patent dispute between Alcatel-Lucent and Microsoft. After a San Diego jury found that the date picker function on Microsoft s Outlook calendar infringed an Alcatel-Lucent patent, the damages arguments between the parties couldn t have diverged more wildly. Citing the entire market value rule, Alcatel-Lucent argued that it should be paid 8 percent of relevant Outlook sales $561 million while Microsoft argued that the damages award should be no higher than $6 million because the patent in question covered a small portion of Outlook s overall functionality. The jury ultimately awarded Alcatel-Lucent $358 million. On appeal, Microsoft repeated its argument that an award based on total Outlook sales was Methodology Earlier this year, Corporate Counsel contacted more than 300 law firms and asked them to provide us with a list of patent lawsuits they either filed on behalf of plaintiffs in federal district court in 2009 or were hired to defend against. To be considered for this survey, the cases in question had to be active as of February 1, 2010. We did not count cases before the International Trade Commission or appellate courts. Some firms listed multiple district court cases with the same plaintiff. If those cases involved the same patent, highly similar technology, or consolidated discovery, we counted them all as one. nonsensical an argument the Federal Circuit embraced while affirming the lower court s finding of infringement. In February the Federal Circuit used similar logic in tossing out a 12.5 percent royalty rate awarded in ResQNet.com, Inc. v. Lansa, Inc. While rulings that limit damages hardly spell the end of high-stakes patent cases, litigators say that such decisions do make it harder for a patent plaintiff to make an intimidating damages demand. I think now you re going to have to come up with a tighter case, if you re going to make that kind of claim, says Hopkins Guy, a patent litigator at Orrick, Herrington & Sutcliffe. It s worth noting that a year ago, few would have guessed that the most meaningful changes shaping patent law at the moment would involve judges reining in damages calculations. Most people were focused instead on patent reform legislation and, as time passed, on how the Supreme Court would rule in the Bilski case. Ultimately, the Court s ruling changed little about patent law or litigation. The Bilski opinion did ensure that patent disputes including those in such controversial areas as software and business methods will continue to flare up. And when they do, there will still be substantial sums of money at stake, and, according to Ronald Schutz, head of IP litigation at Robins, Kaplan, Miller & Ciresi, defendants who are often ready to fight harder than ever. The amount of money that defendants are willing to spend on defending an NPE litigation these days is mind-boggling, says Schutz, who busied himself mostly with contingency-fee plaintiffs work in 2009. Faced with a steady docket of patent litigations and with no serious changes to damage calculations apparently coming via legislative patent reform anytime soon defendants may feel that fighting is all they can do.

2009 & 2008 Patent Litigation survey 2009 2008 2009 1 1 Fish & Richardson 77 2 3 Kirkland & Ellis 57 3 N/A Quinn Emanuel 54 4 13 Kenyon & Kenyon 52 5 18 Finnegan, Henderson 50 5 7 Niro, Scavone 50 7 11 Morrison & Foerster 46 8 N/A Wilmer 44 9 5 Howrey 43 9 2 Jones Day 43 9 N/A Knobbe, Martens 43 12 24 Alston & Bird 42 13 6 Greenberg Traurig 41 14 27 DLA Piper US 40 14 4 Foley & Lardner 40 16 N/A K&L Gates 39 16 N/A McKool Smith 39 18 N/A Akin Gump 35 19 32 Wilson Sonsini 34 20 11 Baker Botts 31 20 9 McDermott Will 31 2008 1 1 Fish & Richardson 98 2 11 Morrison & Foerster 69 3 3 Kirkland & Ellis 63 4 5 Howrey 62 5 2 Jones Day 55 6 7 Niro, Scavone 54 7 27 Winston & Strawn 52 8 N/A Knobbe Martens 46 9 4 Foley & Lardner 45 9 13 Kenyon & Kenyon 45 11 18 Finnegan, Henderson 44 11 9 McDermott Will 44 13 11 Baker Botts 42 14 N/A Morgan Lewis 41 15 15 Heller Ehrman 40 15 18 Sidley Austin 40 17 24 Alston & Bird 39 18 18 Kilpatrick Stockton 36 19 N/A Townsend and Townsend 35 20 N/A Akin Gump 34 20 9 Cooley Godward 34 By any measure, Fish & Richardson comes out on top. August/September 2009, IPLB

, 2006, 2005, 2004 & 2003 Patent Litigation survey 2006 1 1 Fish & Richardson 79 2 2 Jones Day 56 3 5 Kirkland & Ellis 54 4 3 Foley & Lardner 45 5 5 Howrey 44 6 12 Greenberg Traurig 39 7 5 Niro, Scavone 38 8 15 Knobbe Martens 35 9 N/A Cooley Godward 33 9 9 McDermott Will 33 11 17 Baker Botts 31 11 4 Morrison & Foerster 31 13 12 Kenyon & Kenyon 28 13 22 Weil, Gotshal 28 15 N/A Heller Ehrman 27 16 27 Connolly Bove 26 16 22 Perkins Coie 26 18 10 Finnegan, Henderson 25 18 10 Kilpatrick Stockton 25 18 12 Sidley Austin 25 2006 2006 2005 1 1 Fish & Richardson 75 2 3 Jones Day 53 3 4 Foley & Lardner 40 4 22 Morrison & Foerster 39 5 5 Howrey 37 5 15 Kirkland & Ellis 37 5 7 Morris, Nichols 37 5 N/A Niro, Scavone 37 9 10 McDermott Will 34 10 9 Finnegan, Henderson 33 10 N/A Kilpatrick Stockton 33 12 12 Greenberg Traurig 30 12 5 Kenyon & Kenyon 30 12 25 Sidley Austin 30 15 2 Knobbe, Martens 28 15 15 Potter Anderson 28 17 N/A Baker Botts 27 17 19 Michael Best 27 17 8 Winston & Strawn 27 20 N/A DLA Piper* 25 Bose Corporation general counsel Mark Sullivan, a longtime IP client, is pleased that he can go to Fish & Richardson for both prosecution and litigation. The acoustics company jealously protects its IP, because, as Sullivan says, if we don t do the right thing, we are out of business. 2005 2004 May 2004, IPLB 2005 1 Fish & Richardson 77 2 Knobbe, Martens 60 3 Jones Day 56 4 Foley & Lardner 47 5 Howrey 43 5 Kenyon & Kenyon 43 7 Morris, Nichols 41 8 Winston & Strawn 34 9 Finnegan, Henderson 31 10 Connolly Bove 29 2004 1 Fish & Richardson 69 2 Knobbe, Martens 57 3 Kirkland & Ellis 50 4 Morris, Nichols 45 5 Howrey 44 5 Pillsbury Winthrop 44 7 Morrison & Foerster 40 7 Sidley Austin 40 9 Finnegan, Henderson 36 10 Morgan Lewis 28

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