Articles Posted in Showing Value

This blog has offered some posts on IP counterfeiting, but not much on what a law department can to do about it (See my post of March 16, 2010: counterfeit and piracy of goods with 6 references.). Therefore, when InsideCounsel, June 2010 at 74, included the K&L Gates Top of Mind interview with PUMA North America’s general counsel, I noted approvingly the steps his group has taken in North America.

1. Make direct contact with PUMA lawyers easy for law enforcement personnel at local, state and Federal levels
2. Train PUMA employees about the destructiveness of counterfeiting and what to do to spot and report it

This blog has offered some posts on IP counterfeiting, but not much on what a law department can to do about it (See my post of March 16, 2010: counterfeit and piracy of goods with 6 references.). Therefore, when InsideCounsel, June 2010 at 74, included the K&L Gates Top of Mind interview with PUMA North America’s general counsel, I noted approvingly the steps his group has taken in North America.

1. Make direct contact with PUMA lawyers easy for law enforcement personnel at local, state and Federal levels
2. Train PUMA employees about the destructiveness of counterfeiting and what to do to spot and report it

No one knows. But academic management literature doesn’t lack for models, theories and research.

“The conventional argument, primarily drawn from upper echelons theory, is that long-tenured executives are a source of organizational complacency. That is, they tend to resist change and embrace the strategic status quo.” Despite this summary statement in the Acad. Mgt. Rev., Feb. 2005 at 71 (citations omitted), the authors suggest at least one counter-explanation. Long-tenured general counsel, to stick with our domain, may not resist change per se, but rather, that they tend to be found in firms with good performance, where a change in strategy may simply not be warranted.”

From a different perspective, you have stayed for many years because you have done a good job and the company has prospered, so why change a winning game?

A recent interview of Hanns Hallesius, Electrolux’s head of IP, brought to the fore several observations.

Hallesius said “We’ve already moved away from a focus on ownership of tangible property, as a measurement of value, to the use of intangible assets to generate cash flow.” IP groups that measure their worth by output (numbers of patents applied for and granted, for example) may want to think more in terms of measuring their portfolio’s worth by revenue generated.

He uses the term “rights management,” a phrase dramatically broader in scope than patents, trademarks, and copyrights. To me that term is too broad because all contracts embody rights and all contracts deserve management.

A previous post laid out five stages of development for intellectual property departments (See my post of May 11, 2010: IP maturity ladder.). What I didn’t write was that the metaphor of rungs of development did not ring true, so to speak. The terms to describe them (in ascending order, “defensive’ ‘cost control’, ‘profit center,’ ‘integrated,’ and ‘visionary’ at the top) are too broad, much too conclusory, and packed too thickly with connotations.

Any analogous tiers to describe law departments as a whole would perforce be even more loose, even fatuous. If, for example, we characterized law departments as “basic,” “developing,” “functional,” “progressive,” and “classy,” we would have to plunge deep into definitions and pretend we were avoiding huge amounts of subjective grading. On a given spectrum, such as talent management, it might be easier to swallow a continuum of practice sophistication, but even in a narrower domain the undertaking would be dubious.

Someone has proposed a taxonomy to describe corporate intellectual property departments. It has five stages, “with ‘defensive’ at the bottom rung and ‘visionary’ at the top, and ‘cost control’, ‘profit center’ and ‘integrated’ marking the steps up in between.” This categorization comes from IP Rev., Spring/Summer 2010 at 10, which refers to a white paper by Chawton Innovation Services.

If we take these five stages as meaningful, the climb up them should correspond to (a) more IP lawyers and staff as a percentage of total legal staff, (b) a larger percentage of the legal budget flowing to the patent and trademark team, and (c) direct reporting of the head IP lawyer to the general counsel, among many other characteristics. Further, the article points out, if your company wants to be at a certain stage of IP sophistication, your legal staffing and spending in support of it should match.

Not every in-house lawyers pines to be a general counsel; many don’t want the pressure and demands (See my post of Sept. 10, 2005: OK to have some B-players who have hit a plateau; May 18, 2007: stress and pressure with 7 references; and June 11, 2008: stress with 18 references.). Thankfully, most are comfortable with their patch of ground.

Few in-house lawyer relish a steady diet mind-bendingly difficult legal issues to wrestle with; most want interesting problems, but not many more recondite than that (See my post of Oct. 18, 2005: mix of rocket science and quotidian work; Dec. 3, 2005: the need to handle a steady diet of normal legal work; Dec. 5, 2005: topsy-turvy pyramid of work; Jan. 25, 2007: think again about commodity work; May 21, 2007: interesting legal work and perceptions of workload; June 14, 2007: more than 50 percent of work in-house could be defined as routine; Aug. 21, 2008: sweet spot; Sept. 27, 2009: Goldilocks balance of work; and June 6, 2008: commodity, routine and standardized work defined.).

Not every legal department strives to be world-class, best in breed, acclaimed and award winning; indeed, getting the job done and feeling pretty good about it serves most general counsel and their legal teams (See my post of; May 16, 2007: be wary of pursuit of world-class status.).

Some social network analysts study the frequency and strength of connections between people. For example, an article in the Harvard Mag., May-June 2010 at 46, shows networks for Harvard inventors who applied for patents between 2003 and 2008. The size, color and location of “nodes” – people in the network – conveys quickly and clearly the patterns of collaboration measured by names on patent applications.

Organizational network analysis has much to offer law department managers (See my post of Nov. 6, 2006: organizational network analysis; March 9, 2007 #3: organizational network analysis; Jan. 25, 2009: value of speaking to a person over querying a database; Jan. 25, 2009: decision analysis and network analysis; and April 29, 2010: information technology is a misnomer.).

Let me sketch a scenario. A law department could ask a group of lawyers who serve a particular business unit to list the clients they have advised during the past year and the estimated hours of service. The color of each client’s node would indicate the client’s level. Once all the legal support was mapped out, the flows of legal services would be much more apparent

Speak to the journalists yourself, general counsel, rather than through the partner at a law firm who represents you. That is the message of an article by Prof. Michele DeStefano Beardslee in the Georgetown J. of Legal Ethics, Fall 2009 at 1259, 1291.

Litigation partners with big egos and marketing on their mind have different motivations than you do when they go on the record. It is the future of the company, not the firm, that should guide comments to journalists (See my post of May 20, 2005: what to do when journalists call; May 10, 2009: when the journalist calls, mix and match buzz words; and Dec. 14, 2005: journalists’ desire to spot “trends”.).

One finding from CPA Global’s State of the IP Industry Survey last year concerned how regularly the 93 participant companies assessed the value of their intellectual property (IP) assets. The executive summary says that “while 20% of companies say they conduct quarterly IP audits, by far the largest proportion (41%) audit only on an annual basis, 10% audit every two years, and 4% say they don’t audit at all.”

Audits take time for in-house IP attorneys, so these numbers give some clues as to how much time is needed (See my post of May 10, 2005: SOX and IP audits; Nov. 13, 2005: IP audits, cost savings and the role of inside counsel at Dow Chemical; Aug. 5, 2007: Hitachi’s efforts to prune it patent portfolio; and April Dec. 11, 2007: Microsoft’s software to classify large portfolios of patents.). The frequency of audits, however, doesn’t tell us how intensive they are.