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FL: Prior to joining Townsend, you gained a significant amount of experience prosecuting and litigating patents on top of your education at Caltech and technical stint at Oracle. Now, when you sit down to negotiate a technology licensing agreement at Townsend, how much of an asset is that technical knowledge and expertise?
It is very valuable. In terms of core competency considerations, when an attorney has a background and experience in complex technology issues, that’s really the perfect example of why it makes sense to use your intellectual property firm when negotiating your licensing deals. An attorney with patent prosecution experience will come to understand a company’s technology and so becomes a great asset at the negotiating table. That’s really the key component of licensing -- to understand and appreciate, even enjoy, the technology, relative to both your client’s objective and that of the parties you are dealing with. That’s the real advantage of using an IP specialty firm versus a general practice firm -- an IP firm is rich with tech-savvy lawyers who can appreciate their clients' core assets..
FL: Can you give me an example of that?
Sure. I recently finished negotiating a licensing deal in conjunction with a venture financing on behalf of a client where we were asked to represent the client over its corporate counsel. The reason that we were selected was because the intellectual property rights license was critical to securing the financing. The parties involved wanted to use a firm that understood its technology and patents.
FL: Do you see this crossover ability between deal-making and patent expertise as becoming more of the norm rather than the exception for attorneys in your field?
That’s exactly right. Right now there are some attorneys and firms that demonstrate that versatility, but there certainly aren’t a lot. It is the direction in which things are going. Attorneys that do have both negotiating and technical experience are in high demand.
FL: As licensed technologies grow more and more sophisticated, what aspects of a licensing agreement must in turn be given particular consideration?
One of the things that become most important, in terms of a focus, is divying up ownership and control of the intellectual property, especially if there is a development facet of the deal. Ownership becomes more important because as technology gets more complicated, it in turn becomes harder to separate who owns what. In other words, ownership issues grow in complexity as technology grows in complexity. It used to be a lot simpler with things like work-for-hire agreements, when ownership tended to be all or nothing. Now with IP from multiple parties overlapping and interlocking and everyone having a great deal of expertise, the task of sorting through layer upon layer can become a real challenge for an IP attorney.
FL: Talk a little about the need to protect a company’s intellectual property assets and use those assets as leverage, especially in an unpredictable economy.
IP is actually gaining in importance in terms of a company’s assets. Companies more and more are recognizing that there is a real strategic value in shoring up their intellectual property. A successful company really needs two things: solid business fundamentals, and a focused, strategically thought out intellectual property protection. For any given company, one of these facets may carry more importance than the other. But for a lot of companies, especially those in the technology sector, the value of the company just isn’t as high as it could be if it doesn’t have strong intellectual property protection in place, and a strategy for managing and maximizing the IP as a business asset.
FL: When a company is considering licensing its "core" technology, what kinds of pitfalls need to be taken into account, and avoided?
The main question that needs to be asked before a company’s "core" technology is licensed out is: Have adequate money and resources been allocated and utilized to protect that technology? You have to make sure that the "core" technology is covered in all conceivable overlapping ways, and that steps have been taken to identify and assess what within that "core" technology is really protectible and by what legal regime.
FL: How important is it for a firm like Townsend to have a balance between patent prosecutors and litigators?
It’s very important, because patent attorneys and litigators are really concerned with two practice areas which are separate, yet related. The skill sets that are required and used in each are different, but they really feed upon each other when you look at the big picture of IP practice. At Townsend, we are much better litigators because we have patent prosecutors, and in turn our patent prosecutors are much better because of the presence and influence of our litigators. They work together to draft language that optimally satisfies the patent office while minimizing vulnerability to litigation attack. That’s really the bottom line, and in my mind, licensing represents the third point on the triangle so that patent prosecution, litigation, and licensing form the complete IP triangle, so to speak.
FL: How much of an advantage does a firm that has offices in many of the technology centers in the West like Townsend have when it comes to the technology licensing practice, in terms of location?
It is a tremendous advantage, because a lot of licensing negotiations are done in person. You have to really work closely with the company, and it just makes a tremendous difference when you’re nearby. And personal contact enhances our understanding of a client's goals. There are so many local tech companies here, and you could probably count on one hand the number of them that use East Coast law firms. It’s just not that common, because you need to have that proximity of location, and it’s something we have at Townsend that sets us apart. One thing I want to emphasize is that the licensing practice at Townsend is fairly new, and yet it’s old at the same time. Townsend has been involved in licensing since the firm’s inception, but in recent years, especially in terms of technology licensing, the practice has become formalized and on the frontlines of what we do.
 | Richard C. Hsu is Co-Chair of the Technology Licensing Group, where he counsels and provides companies advice on all licensing transactions and associated intellectual property issues. He has extensive experience in licensing, development, acquisitions, service and other partnering agreements for a variety of industries, including semiconductors, life sciences, medical devices, hardware, software and telecommunications. |