Oblon, Spivak Sees Profits In Patent Prosecution

Oblon Spivak Sees Profits In Patent Prosecution

IP Law Bulletin (Monday, January 31, 2005)--Oblon, Spivak, McClelland, Maier & Neustadt, one of the largest intellectual property firms in the U.S., is operating on a principle that flies in the face of conventional wisdom these days: prosecution work can be just as rewarding as IP litigation.

The firm, which has filed more utility patents than any other U.S. firm for the past 14 years, continues to see patent prosecution as a vital part of its business, even though litigation has become another important source of revenue, says managing partner Marvin J. Spivak.

"Large general-practice firms aren't interested in prosecution because of the heavy infrastructure required to do it well. They think the money is in litigation. But our prosecution practice is just as profitable," says Spivak.

Certainly, with its 460 employees, only 90 of whom are attorneys and 20 of whom are patent agents or technical advisors, Oblon Spivak is a good example of the infrastructure required to run an efficient patent prosecution business.

A ratio of four staffers to each attorney is much higher than anything you'll ever find at a GP firm, but it makes sense for a firm that obtained some 3,552 patents in 2004, up 4.8% from 3,462 the previous year, according to statistics from the USPTO.

Filing thousands of patents for clients all over the world requires an organizational structure that would be daunting for many firms. Complex software systems and a big staff are needed to track of receipts from clients and the U.S. Patent and Trademark Office, proofread filings and search for prior art.

It's easy to see why many larger firms find that patent prosecution just isn't worth the investment, but Spivak insists the investment pays off when it's done right.

The firm's commitment to its prosecution business is evident in its location. When the USPTO made plans to move from 18 buildings spread throughout Crystal City in Arlington, Virginia, to five interconnected buildings in Alexandria, Virginia, Oblon Spivak followed suit.

The firm once had a satellite office in San Jose, California, but that office proved impractical to administrate, Spivak says. "We found that administrating another office was a headache. Clients wanted to use people back in the home office anyway. We've found we can work very well with clients from all over the world by traveling extensively and staying in touch from our offices in Alexandria," Spivak says.

In an era when communications seems dominated by e-mail and telephone, proximity to the patent office may not seem important. But Oblon Spivak is still a strong believer in the importance of personal contact with patent examiners, according to Spivak.

"We believe holding personal interviews with the examiners is important. In a personal setting, you can show drawings and diagrams and have a more interactive dialog. It's much more difficult to have that kind of communication over the phone or by mail," he says. One example: When the firm wanted to demonstrate a patent-pending new technology for a Toyota Prius, it had one of the cars brought to the patent office so the examiner could experience it up close.

Oblon Spivak's proximity to the patent office is also an advantage for another key practice area: The firm boasts possibly the largest interference practice in the U.S, representing one of the parties in 10% to 15% of all patent interferences.

The group includes Charles L. Gholz, one of the world's leading interference experts, who frequently lectures on the complex strategic and tactical decisions involved in interferences.

In addition to its patent group, the firm also has a large trademark group, with clients such as Safeway and Toys ‘R' Us. The copyright group is smaller, consisting of two attorneys from the trademark section who have developed expertise in copyrights.

"Our patent prosecution and interference businesses are important foundations for our litigation business," says Spivak. "Many of our litigation clients were originally prosecution clients. And in light of recent developments such as Markman hearings and the Festo case, it's important for litigators to understand prosecution procedures."

Although the firm is best known as a patent prosecution specialist, as much as 50% of its revenues now come from patent and trademark litigation. Indeed, the firm has over 50 cases pending in federal district courts, according to Spivak.

"We've litigated some important cases. For instance, we litigated the precedent-setting Festo case before the Supreme Court and the en banc Federal Circuit," he says. The firm is active in district courts around the U.S., especially in Delaware and Virginia. In addition to the district courts and the Federal Circuit, it also litigates patent cases before the U.S. International Trade Commission.

Building the firm to hundreds of employees took several decades, with each hire carefully selected individually rather than through acquisitions, says Spivak. He and the other name partners started the firm in October 1968 when they were in the 20s. All five are still active in the firm. Part of the hiring strategy has been to secure staff with inside experience from the USPTO and other government agencies, including top guns such as former commissioner Gerald Mossinghoff, now a senior counsel to the firm. Mossinghoff advised President Reagan on the establishment of the Court of Appeals for the Federal Circuit and served as President of the Pharmaceutical Research and Manufacturers of America.

Likewise, the firm's trademark group includes David J. Kera, a former Administrative Trademark Judge of the Trademark Trial and Appeal Board and a nationally recognized authority on trademark licensing.

The firm also recently hired Stephen G. Kunin, the former Deputy Commissioner for Patent Examination Policy with the USPTO, who came to the firm with more than three decades of experience from the USPTO.

One of the firm's partners, Kathleen Cooney-Porter, was just selected to be a member of the USPTO Advisory Board.

In addition to such established figures, the firm also actively hires PhDs with technical expertise, who are frequently put through local law schools such as Georgetown and George Mason University. "We advertise for staff in technical journals, and we frequently get hundreds of applicants. With such a strong pool of candidates, we're lucky enough to end up with some pretty good hires," says Spivak.

The firm's retention record has been strong, even at the staff level, says Spivak. "We noticed a big difference when we moved to our new location in Alexandria. We were concerned that we would lose some key staff members when we moved. But at the staff level, the turnover rate has dropped to a third of what it used to be," he says. The new offices have room for further expansion. Although Spivak doesn't belive in growth for growth's own sake, he says he thinks the firm will continue to expand.

"Our U.S. clients are becoming bigger and bigger. And our foreign clients are becoming bigger in the U.S. and litigating more here," he says.

He says the firm has frequently been approached for acquisition by other firms, including general-practice firms, but that a merger never made any sense. "Conflicts would become a big issue," he says. "In fact, we've turned away some big clients ourselves because we are one of the few firms that can handle a huge volume of patent applications."

CORRECTION: An earlier version of this article incorrectly identified David Kera as the head of the firm's trademark group. The head of the group is Jeffrey Kaufman, a former trademark examining attorney with extensive experience practicing before the USPTO Trademark Trial and Appeal Board.

Reprinted with permission from IP Law bulletin.