On March 7th, Boston-based firm Ropes & Gray announced plans to restructure its intellectual property practice. Over the coming months, roughly 100 lawyers and staff led by Ropes & Gray partner Joseph Guiliano will leave Ropes & Gray to establish a new spin-off firm specializing in patent prosecution and related matters. Ropes & Gray will retain its IP litigation and transactions practices and will continue to offer services including trademark prosecution and patent analysis, strategy, and counseling. The to-be-named firm will maintain close relations with Ropes & Gray and will open offices in New York and Silicon Valley.
The bulk of Ropes & Gray’s departing IP practice are alumni of Fish & Neave, a 160-lawyer IP boutique that Ropes & Gray acquired in 2004. However, the spin-off is not a total reversal of the acquisition: a sizable portion of the intellectual property practice will remain at Ropes & Gray.
Ropes & Gray’s move may represent a larger trend within Big Law. Guiliano declined to speculate on what the spinoff means for the market and recommended that firms assess their own situations in deciding what to do with their IP practices. However, commentators suggest that patent prosecution is leaving Big Law. Several factors may be driving this trend: competitive cost pressures, changes in the administrative proceedings at the Patent and Trademark Office, and the Supreme Court’s recent holding in Alice Corp. v. CLS Bank International, 134 S.Ct. 2347 (2014).
First, patent prosecution is becoming a commodity. Companies are increasingly turning to solo-practitioners and boutique firms for their prosecution needs. The resulting competition drives down costs, which pressures firms carrying substantial overhead. Thus, junior associates handle patent prosecutions to reduce billing rates, but their inexperience may result in slow turnaround and inconsistent work-product. Compared to Big Law firms, IP boutiques and smaller firms have lower overhead: thus, they have the flexibility to offer static or lower pricing for patent prosecution matters. Additionally, big firms may be wary of taking on patent prosecutions that can lead to internal conflicts of interest.
Nevertheless, Big Law can offer their clients advantages that may offset higher costs. IP matters do not exist in a vacuum—companies seeking IP services may need other related services that big law firms can deliver. For example, they may need assistance in securing funds, advice on data protection regulations, and more. Furthermore, large firms have resources to attract talent that may be less interested in solo-practice or boutique work. If the attorneys in Big Law produce better outcomes for clients, the higher invoices may be warranted.
The second factor that may be driving Ropes & Gray’s spin-off is the evolving practice of administrative trial work at the United States Patent and Trademark Office. In 2010, the America Invents Act, established the Patent Trial and Appeal Board, which handles both post-grant reviews and inter partes reviews. Inter partes review is a new procedure to challenge the validity of a granted patent. Ropes & Gray chairman R. Bradford Malt suggested that the Patent Trial and Appeal Board streamlined IP litigation by making it more efficient. Unfortunately for Big Law, that means that IP practices may be overstaffed.
Finally, Malt hinted that the Supreme Court’s 2014 ruling in Alice Corp v. CLS Bank International, which tightened patentable subject matter, reduced demands for patent prosecution. At the same time, Alice raises the importance of high-quality representation in patent prosecution proceedings—which may increase its cost. The complexity of prosecuting patents in up-and-coming technology, such as software and bioinformatics, requires both expertise and billable hours.
For a general comparison of big law firms entering IP practice and IP boutiques, IPWatchdog provides further analysis.