Trends in the Intellectual Property Legal Marketplace

One of the most frequent questions that I am asked is what trends I see in the areas of intellectual property, brand protection and the marketplace for legal services.

There are a few interesting, long-term trends in the data worth mentioning, that affect everyone and not just lawyers or those who work in the brand protection and IP industry.  Perhaps the most glaring one is that:

The Cost of Doing Business Globally is Going Down, But the Cost of Protecting Intellectual Property Keeps Going Up

By 2014, the out-of-pocket costs of engaging in global commercial activity have become extremely low.  In fact, they are the lowest they have ever been.

For example, a relatively desirable Internet domain name can be leased for only a few dollars a year.  Using templates and shared hosting, virtually anyone can design and host an e-commerce website very cheaply.

This is a departure from a decade ago, when designing a website required an understanding of HTML and related computer languages, technical knowledge generally limited to IT Departments and computer consulting firms.

Similarly, marketing has become cheap.  Today, by using free e-mail accounts and social media platforms like Facebook, Pinterest, Google+ and Yahoo! for communication and marketing, and low-cost international distribution and shipping channels like eBay, Stamps.com, AliBaba and others, a well-managed small business can conceivably generate hundreds of thousands of dollars per year in only a short amount of time.

Yet the out-of-pocket cost involved in protecting a brand against Intellectual Property theft and infringement, both online and in the brick and mortar context, continues to spiral ever upward.

For example, the high-profile attorneys in the Apple v. Samsung patent wars charged their clients $1,200 per hour.  The hourly billing rates at all the large law firms have reached an all-time high, with many lawyers routinely charging well over $1,000 per hour.

And clients who choose smaller law firms and those firms that offer "flat fee" arrangements may get a better deal, but are not immune from the increased competition for high-quality intellectual property legal services.  

For example, one small law firm in Maryland posted its flat fees online, and notes that it is charging up to $12,000 for filing a provisional U.S. patent application.  An appeal if it is denied could add another $8,000.  That may be less than a large law firm's services, but just filing for a patent is still an expensive proposition.

And of course, that is just the first step in protecting Intellectual Property.  Filing for a patent or trademark is no guarantee that it will be respected by others. 

When infringers are inevitably discovered, commencing and pursuing complex litigation against them routinely costs companies many hundreds of thousands of dollars per year.

Therefore, it is clear that while many are finding it easier and easier to start and develop businesses, they are also finding it more and more expensive to effectively protect their Intellectual Property assets against thieves and infringers.

What does this trend signify?  It would appear that the marketplace is beginning to fully understand that the legal services offered by experienced Intellectual Property lawyers are at a premium, because branding and IP assets in general are as valuable -- if not more valuable -- than traditional ones.

Intellectual Property: The New Real Estate

Alexander Graham Bell's Telephone Patent

Intellectual property was once viewed as an interesting, quirky but relatively obscure area of legal practice limited to a select few lawyers and academics. Patent lawyers, who were also engineers or chemists, were valued by inventors and companies which had the incentive and ability to pay them to physically navigate the byzantine Patent Office in Washington, D.C., and leaf through musty documents to file patents.

With respect to trademarks, most recognizable household brands were displayed on products stocked on grocery store shelves, and advertised on a few television networks.

Copyrights were valuable to a few writers, musicians and movie studios that were fortunate enough to collect royalty checks from licensing their creative works.

Today, however, intellectual property concepts affect our daily lives in innumerable ways, and obscure legal doctrines such as "exhaustion," "nominative fair use," and "product configuration trade dress" are suddenly controversial.

These concepts affect how we communicate, how we shop, what we read, eat, the games we play and what medicines we take.  They affect our schools, our churches and our children.

Intellectual Property issues are no longer obscure, as they are seen daily in headlines like these:

•   Anti-CounterfeitingTrade Agreement Protests:  Thousands Take to the Streets Across Europe

•   Design and Drama Mark First Day in Apple Samsung Trial

•   US Athletes Protests London 2012 Olympic Trademark Rules

•   Mexico Signs Anti-Piracy Treaty, Setting Up Battle With Activists

So why did intellectual property suddenly become so controversial and important to our daily lives?

The primary reason seems to be connected to the exponentially growing technologies that have made ideas and information more valuable than land or gold:  a new form of real estate.

Indeed, as communication technology allows for the freer exchange of ideas, economic value has transitioned away from underlying physical objects and land, and toward abstraction.

By way of a concrete example, a century ago, virtually every one of the 25 largest companies were involved in shipbuilding, steel, coal and railroads. In other words, it was more valuable and important then to move people and things around.

In 2012, the majority of the top 25 most valuable brands in the world and the largest companies in the world, are engaged solely in the transport of ideas and information.  Examples include Apple, IBM, Visa, MasterCard, Google, Microsoft, AT&T, Verizon, Amazon and Facebook.