Ropes & Gray Ending Patent Business

Ropes & Gray is ending its patent prosecution practice.  It is still unclear whether the ~100 patent attorneys leaving will re-claim the Fish & Neave name.  [American Lawyer]

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

59 thoughts on “Ropes & Gray Ending Patent Business

  1. Surprised no one’s mentioned this yet:

    The real issue is conflicts. When you take on lots of small, low dollar prosecution matters, that can conflict you out of taking big, high-dollar litigation by a competitor. E.g. say you do some battery patents for a small company. Then Tesla comes knocking and wants to sue, let’s say, Samsung for violating their battery patents. But taking that runs counter to your client’s interests. Maybe they are a (small) Samsung supplier and make some of the batteries at issue. Bam, you just lost 5 million in litigation fees in favor of 150k in prosecution fees.

    These things go in cycles. Big firms want to offer clients full-service, one stop shopping, so they acquire a prosecution boutique. Then they realize all the conflicts it creates and dump it. A few years later, they forget the lesson and acquire a prosecution boutique again. It’s like the Lion King circle of life, if Mufasa had constant amnesia.

    Atari Man, great description of the prosecution business.

    1. Well said.

    2. KB, LOL about Mufasa with constant amnesia, and you’re right about the conflicts issue, totally overlooked that one despite having gotten burned by it in the past.

    3. Some truth to the conflicts problem. But, the flip side is that the prosecution work can lead to getting litigation and licensing work too.

  2. Should read or even substantial

    1. This was meant to be in response to something below. Feel free to delete Dennis.

  3. They are too late to resume use as FISH & NEAVE and use that to maintain their registration. Their registration needed renewal by August 27, 2016.

  4. Interesting. Prosecution has become such a low margin business.

    1. We get about 50% less per patent application than 10 years ago, and are expected to do about twice the work. Same with office actions.

      Terrible area to practice law. I had the chance to focus on litigation or transactional work. What a mistake. Plus, we have the constant drum beat of the anti-patent judicial activists trying to burn the system down with Google bucks.

      1. This brings up too one of the great l1es of people like Lemley, MM, Ed the Ned, and other anti-patent judicial activist fueled by Google bucks or ideology and completing lacking in morals.

        The reality is the better the prosecution by the USPTO the more worthwhile an attorney is. I reviewed one patent portfolio from a large client and estimated about 1/3 of the patents were allowed negligently by the examiner. So, the client cannot tell the difference between people doing a good job and getting good patents, and those that have no idea what they are doing.

        But, the propagandist (Lemley, etc.) say it is the opposite. I feel like I need a shower ever time I see Lemley’s name.

        1. “But, the propagandist (Lemley, etc.) say it is the opposite. I feel like I need a shower ever time I see Lemley’s name.”

          That’s because Lemley understands that the system is an entitlement program that is setup to “negligently” issue patents when they don’t magically become invalid within a tiny period of time of administrative review. We both know what kind of patents you’re talking about where 1/3 are estimated even by you, a relative cheerleader of bad patents, and you’re simply talking about the same problem MM goes on and on about but with a slightly skewed perspective. You blame it on the PTO “negligently” issuing patents, while MM says that the PTO is somewhat at fault, but that the system even attempting to examining those patents is folly because of the high inherent error rate in allowances.

          It is literally the same issue seen from an insider/outsider viewpoint.

        2. Night, the problem is that patent prosecution is structured as a business so that patent prosecutors have every incentive to cut corners.

          Agreed?

          1. You mean except for the corner that every atttorney has in regards to ethics, right Ned?

            1. The ethics of most patent attorneys are the ethics exhibited by the Spartans.

              1. Not sure what you mean by that comment, Ned, and perhaps the crowd that you run with is an abnormal crowd, but the patent attoneys I know zealously guard their ethical responsibilities.

          2. Ned Heller, I don’t think that patent prosecution is any different than other areas of law. When I was in the business side of things, I used to hire attorneys all the time for litigation, contractual work, etc.

            Not really a difference.

    2. By low margin I think you mean in the leveraged business models utilized by largish (50+ attorney) firms. An individual patent practitioner realizes extremely high margins on their work.

      1. I would enjoy some statistical basis for the statement, H2H.

        Anecdotally, the one off that has high realization rates does not speak to the entire such business model (for a variety of reasons including size/stability of clients).

        1. AIPLA publishes a lot of good information. An individual “billing” 1000 hours a year * 25 hours per application * 7000 an app = 280K realization. Overhead will take about 17% of that. I picked 1000 hours because that’s what I’ve seen on average factoring in extensive marketing every couple of years. Many solo’s do better and some do worse. A group of patent attorneys (5-10) can do better (albeit it with higher overhead) by servicing larger clients and sharing work.

          I run these numbers by folks who came up in the 80’s and practiced in the 90’s and early 2000’s and they vomit. I get that it used to be very lucrative. But there’s still plenty of money for patent attorneys who enjoy what they do.

          1. H2H that is interesting. I have worked for AMLAW 50 firms and large IP firms (100-300) attorneys. How do you get the business?

            How much is mal practice insurance?

            How about docketing software?

            Also, seems that large companies don’t want to use singles or even 5-10 lawyers, but prefer firms like I work out now that have a huge capacity. A tech company can say to us they want another 50 patent applications filed right away and we can do it.

            1. Market. Referrals help a lot.

              Insurance varies on the state and your set up. For a variety of reasons solos and small (5ish attorney) firms will pay less… usually below $6,000 a year per attorney.

              Docketing software is dirt cheap. There’s lot of competition now and a docket of 500 families can be managed on the cloud for under $1000 a year. Many big companies manage their own dockets and filings (often in India). That really reduces overhead and mal-practice.

              You’re right, many companies don’t want to work with solos. They also don’t want big firms. They want 10 lawyer firms with “partners,” i.e., attorneys with 7+ years experience doing the work. The relatively flat structure allows for low rates and most of the money goes directly to the prosecution (as opposed to 50% of it going to a small board who aren’t seen as value generating). I guess if a firm of 100 patent attorneys could maintain the flat structure then they would be able to get a lot of work.

              1. I appreciate your reply. No idea it was so cheap to start your own shop. I will keep it in mind.

        2. AIPLA publishes a lot of good information. An individual “billing” 1000 hours a year * 25 hours per application * 7000 an app = 280K realization. Overhead will take about 17% of that. I picked 1000 hours because that’s what I’ve seen on average factoring in extensive marketing every couple of years. Many solo’s do better and some do worse. A group of patent attorneys (5-10) can do better (albeit it with higher overhead) by servicing larger clients and sharing work.

          I run these numbers by folks who came up in the 80’s and practiced in the 90’s and early 2000’s and they look at me cross-eyed. I get that it used to be very lucrative. But there’s still plenty of money for patent attorneys who enjoy what they do.

      2. Prosecution just isn’t the type of work that lends itself to large firm practice.

        I think larger firms bought up pros practices because

        1) the financial crisis of 07-08 caused a lot of disruption and left a lot of lawyers scrambling for new work, combined with

        2) large firms overestimating the amount of prosecution they would need to partake in to get into the IPR game. Also needing reg. nos. for litigators, which many didn’t have but now do.

        I think things are just resetting to the way they were–smaller boutiques and what not doing most of the pros. , and more shedding will continue. The baseline economics never really changed.

        1. I think it to be a huge mistake to think that “The baseline economics never really changed.

          The landscape has changed drastically.

          1. How? I am fairly young, so I wasn’t aware of the way things were before.

            The older practitioners I work with don’t really feel things have changed much. The ones I talk to that do feel this way generally feel entitled to more money than they make without keeping up with changes or doing things differently.

            1. generally feel entitled to more money than they make without keeping up with changes or doing things differently.

              According to you, there are no such (de minimus) changes TO keep up with…

              1. I am trying to get you to provide examples and evidence about how the practice has changed in ways that are not de minimus.

                There is still plenty of money in pros as is mentioned by H2H. It is just not biglaw money.

                I am fortunate to be young and not be jaded by the (falsely high) expectations stemming from the (unsustainable) golden era of big law and patent law I guess.

                Does your criticism go beyond not making as much as you had been accustomed to in the past?

        2. They brought in the prosecutors to get the patent litigation when damages awards got way out of whack. Once patent litigation became less lucrative there was no way Ropes and Grey’s board was going to share with the patent prosecutors. That’s true for all GP firms. And at those rates, the patent prosecutors weren’t going to have any work to do anyway.

  5. Patent *prosecution* business, Dennis. Presumably (I couldn’t get behind the paywall to verify) RG will stay in the less risky and more lucrative business of patent litigation and IPRs.

    Gee, after the Medicines Company fiasco, ya gotta wonder what took ’em so long to figure out that the risks aren’t worth the rewards.

    1. In what way is Pros. risky?

      It doesn’t lend itself to high volume work and billing rates, so I get how it isn’t lucrative.

      But if you have a good client base, it can be one of the least volatile areas of law that there is.

      1. I think they were referring to this malpractice case against Ropes & Gray:

        link to law360.com

        I don’t think the settlement amount was public, but it was potentially some hundreds of millions.

        Although such cases are rare, the low margins don’t do much to make up for it.

        1. Thanks J. Real malpractice risk for patent attorneys (1) dates are so clear and so a missed date is an easy win; (2) so many patents are found invalid.

          1. Dennis, the first point is the big one: missed dates are just slam-dunks for malpractice. Additionally, as others noted, the mark-ups just aren’t there. With litigation, you can put four lawyers in an all-day meeting, and three of them bill for all the time but don’t need to do anything. You can’t do that with patent drafting. Moreover, since it takes brainpower to draft a patent, for most drafters there’s a limit to how much good work they can do in a day. Also, since so much is unknown at the time patents are drafted, and since companies need to cover various bases, the per-patent budget is much smaller than in litigation; many applications will be abandoned along the way, and many patents will end up just being wallpaper, but those all come out of the same patent procurement budget. But in litigation, the stakes are known and companies are willing to spend significantly more, often to enforce or defend against a single patent.

            On the other hand, for several reasons I disagree about the threat of patents being found invalid to be a disincentive to maintaining a prep/pros practice, because the likelihood of getting sued for writing a bad patent, let alone being found to have committed malpractice, is low. Inter alia:

            First, you can’t draft better than the inputs you’re given, and often, at the time of drafting, there are insufficient inputs. Inventors/companies don’t know where the technology is going to go or how they’re going to implement it in the commercial setting. So what you thought was a good disclosure at the time to capture what the client thought would be its commercial embodiment may require stretching of the claims at the Markman hearing ten years later in order to capture infringement, resulting in invalidation under 112 or 103. We can’t be blamed for being unable to turn water into wine.

            Second, the law changes. Ten years ago, when KSR was announced and was the talk of the town, no one would have predicted that today (a) SCOTUS was going to make a mess of the law with Alice/Mayo/Myriad and (b) Congress was going to empower patent death squads in the form of PTAB panels that use BRI but don’t allow for claim amendments. As practitioners we’re tasked with operating within the legal landscape as it is at the time, not as we guess it might be at some point in the distant future.

            Ultimately, if you’re a good patent drafter/prosecutor, you’ll be able to more than pay the bills, but patent litigation has fewer risks (hey, someone’s going to lose), and more funds available. So it’s understandable that some firms conclude that patent prep + proseuction isn’t worth the risk. As I said in my original comment, after the fiasco with the bivalirudin patent term extension (a missed date matter), I’m just surprised it took R&G this long to come to this conclusion.

            1. Atariman. Thank you for elaborating. This is a great analysis of what is going on.

            2. It cannot be that all patent prosecution is the same. Prosecution of drug patents, that are worth billions to their owners, has to be placed on a different level than prosecution of your routine big IT patent that only seeks to maximize piles for licensing purposes.

              Also, the patents of startups are far more important than the patents of any big company other than big Pharma.

              It is mistake for any patent prosecution firm not to tailor its representation to its client.

            3. “Inventors/companies don’t know where the technology is going to go or how they’re going to implement it in the commercial setting. So what you thought was a good disclosure at the time to capture what the client thought would be its commercial embodiment may require stretching of the claims at the Markman hearing ten years later in order to capture infringement, resulting in invalidation under 112 or 103. ”

              Your priority date should be the markman hearing date. And you should have to file a new application.

              Absolutely disgusting.

              Draft for the invention that they possess at the time of filing and everything will fall the way it’s supposed to. Doing otherwise should be intentional misconduct and grounds for disbarment.

        2. That was a pretty negligent screw-up by R+G and part of the problem with having big-firms manage day to day prosecution.

          They want to delegate away pesky deadlines because you can’t justify ripping off clients with high billing rates on such tasks vs. litigation, but you really need qualified people making sure important deadlines are met.

          Biglaw is the problem, not pros.

      2. Quasar,

        The volatility may not (necessarily) come from the client side, but there can be little doubt that the huge transitions in patent law favoring Big Corp mean that having a “good client base” just is not the same thing as it has been.

        Take away that premise in your statement, and what are you left with?

        1. Anon, that is sort of vague.

          What huge transitions favoring big corp? Fees are fairly reasonable to prosecute patents for normal sized corporations.

          If you have clients who are innovating and filing regularly, I don’t really see how PTO policy would sufficiently disincentive them from filing.

          Patent filings and grants are still at a high water mark so the demand is there. I am really at a loss as to what you are referring to.

          1. It is not vague at all (if you have been following along the threads for the last few years).

            The macro-economic picture of the patent landscape is rather hard to miss. Please tell me that you have noticed this.

            1. Discussion is long on the uptick in “anti patent attitudes” but short on evidence as to how that actually effects day-to-day practice.

              The macroeconomic picture is that people are still filing patents and suing others for infringement.

              I guess it could be catastrophic if you had been servicing a large proportion of software clientele. But I sort of lack sympathy for people who tried to get in on a fad rather than building a stable, diverse practice.

              1. And I have little patience for those that call the single most expansive area of innovation a “fad.”

                (not that building a stable and diverse practice is bad, that’s actually solid advice).

                1. I am not talking about those who took some or substantial numbers of software-related clients.

                  I am referring to those who based their entire practice on it and ignored the writing on the wall after Bilski.

                2. the single most expansive area of innovation

                  ()()()()()()()++++++()()()()()()()()–>(use)

                  Oh lookie! I just innovated a new computer display! Can I haz patent now?

  6. Smart move.

  7. Bring back the bi-plane!!

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