Some thoughts on "The Maw"

I have been away for a while, work at Leason Ellis (now, I think the biggest IP boutique firm between NYC and Boston) has kept me really busy.  However, I was once told that the most important time to get your ideas out is when things are going well.

Unfortunately, things are not going well for a lot of lawyers out there (IP specialists included). The causes for this are likely beyond my ability to describe, but a major factor is what I call "cost per lawyer per unit work". In the old days, law firms wouldn't compete with one another using cut rate pricing. The supply / demand curve of reputable attorneys wasn't tilted in favor of supply. Now, through the founding of dozens of new law schools, the supply metric has gone exponential. The rate of growth of lawyers does not match the rate of growth of law firms, or the general economy.  The end result is that you will have more lawyers looking for the same opportunities.

Clients, knowing this, use their leverage to bring down the cost of services.  Normally, this is just a feature of capitalism, and no one should be surprised.  However, in law firm models, forcing down the price does more than cut into a specific partner's profits.  It cuts into the firm profits. As firm profits begin to constrict, the "Rain Makers" start looking for another ship to sail (we can have a discussion on how Partners became "Armies of One" some other time). Once some of the big guns leave, the firm profits begin to contract severely. Associates, staff attorneys, paralegals all begins to fall to the budget ax. This collectively aggressive consumption of the internal human capital is a feature I call the "The Maw".

 The Maw can, and will (I have experienced it first hand) chew through the entire professional rank of a law firm without ever solving the fiscal difficulties of the Partnership. The preferred response once the Maw has begun to consume staff is to throw larger and larger supplicants into the abyss, in hopes of appeasing its hunger. This never works. All the major firms that threw virgin first year sacrifices into The Maw 3 years ago, are likely still throwing people into the Maw today.

The only way to satisfy the hunger of The Maw is to get ahead it.  This happens by reducing the cost per lawyer per unit work. The only way to do this is to lower the cost of the work billed to client. The only way to do that is to lower the price the firm pays to its members to do the work.  This doesn't always mean lower compensation for everyone. However, the fixed income that law firms provide to their professional class is not flexible.  Therefore, to be truly Maw resistant, compensation needs to be variable, for everyone. Associates should be able to ask for, and receive, a massive pay cut, instead of having the firm select between keeping one group of associates at full salary, and terminating another.
  

Inventor Portrait

In you are a patent attorney, then odds are you like inventors.  Dealing with with minutiae of corporate IP systems (I am looking at you, un-named multi-national corporations with your terrible in-house IP docketing software), not so much.  However, bureaucratic obstacles aside, I love working with men and women who pursue an idea and turn into into a tangible thing.

That is what makes each of the people profiled in these videos special, their willingness to pursue an idea until it was something that later generations can build-up. Being a giant, that lets us stand on your shoulders, is still vitally important to both our society and our economy. For that, we thank you.

P.S. Ralph Baer - as a man who enjoys Mass Effect 3 from his couch, I salute you.



Inventor Portrait: Ralph Baer from David Friedman on Vimeo.

Whitney Houston and the Morality of Copyright Term Extensions

The recent untimely death of diva and part time actress (who doesn't love "The Bodyguard"...) Whitney Houston has got me thinking about the recent extension of the Copyright act. (Recent as in 1998 -- but when you have a law that goes back to 1790, almost anything is "recent".) I think that the Act, even flawed as it was, demonstrated a triumph of Moral/Economic IP, as well as tangible evidence that Michael Eisner did not want Mickey to go off copyright on his watch.

Wow, that's random you say. Well not really. Using Michael Jackson and Whitney Houston as two recent examples, we can conclude that Copyright Terms that exist beyond the life of the artist, are in part, social insurance programs designed to care for the offspring or spouses of artists. The most recent extension of the copyright act is "Life + 70 years" for authors (or songwriters) and "120 Years after creation  / 95 Years after publication" for corporate authorship. Leaving aside the arguments about corporate authorship (which is where the "Mickey Mouse Protection Act" comes into play), lets look at the effect of the term for regular authors.

Both Whitney and Micheal had substance abuse issues. Likely, these issues killed them. Both Whitney and Micheal have children who will grow up parent-less in a world which places a significant dollar value on their talent. Their heirs (notably their minor and semi-minor children) should be allowed to collect on the remaining value of the works, that society is willing to pay. This is more true in situations where the artist has died fairly young.

It is impossible to calculate the value of having a world renowned (and rich) artist as your parent. As a society, we have made a collective decision that the works of art are still valuable to us after the untimely passing of their creator. Therefore, easily identifiable heirs should be the recipient of that residual economic value. As it stands, Whitney's heir's have copyright income till 2082. That's a long time. But, Whitney's child is 18. If her mother was a non-substance abusing hedge fund manager, it would be obvious that by the time she was 88 she would have lived a life of privilege.

 If, as some argue, copyright terms should expire upon the death of the author, they as a society, are we prepared to send Micheal Jackson's children to love on the south side of Chicago with their abusive grandfather and enabling grandmother? From a moral rights stand point, the value of Micheal and Whitney's contribution to society in terms of economic output has vastly exceed the amount they were allowed to collect from society in life.

Intellectual Property is not just something that evil record companies use to sue you.  It is a form of deferred pension to those who create lasting works. It is a source of economic security for those left behind, when troubled talent meets an untimely end. IP should extend beyond the life of the artist because....I don't know...the children are the future.

You got a job, now what?

Even with last week's job report steady employment is still difficult to find for a lot of people. One of the demographics having a slightly easier time achieving the employment dream are those young people with hard science and engineering degrees. regardless of if you are going to work for Microsoft or some garage stat-up, you should keep in mind what is being slipped into your employment contract.

A good illustration of the pitfalls of not properly reading your employment contract can be found in Picture Patents, LLC v. Aeropostale, Inc.  (Google Scholar is a god send for cheap Attorneys who hate to use the Westlaw accounts).  While this case is not new (April 2011) it does provide 2 key point I want to make about employment contracts and keeping your rights.  


A bit of back story. Ms. Baker, a student at Columbia, got an job working for IBM. Excellent right! Well, IBM being a huge, 100-year old multinational corporation who builds Jeopardy winning supercomputers in its spare time, is not an entity to let something like an employment contract be a Staples brand boiler plate. The employment contract has all the obvious provisions about not showing up drunk and sexually-embarrassing your co-workers in the breakroom.  In addition it has this doozy of a IP assignment section. The relevant part states: 

4. I hereby assign (emphasis mine) to IBM my entire right, title and interest in any idea, invention, design of a useful article (whether the design is ornamental or otherwise), computer program and related documentation, and other work of authorship (all hereinafter called "Developments"), hereafter made or conceived solely or jointly by me, or created wholly or in part by me, whether or not such Developments are patentable, copyrightable or susceptible to other forms of protection, and [sic] the Developments: (a) relate to the actual or anticipated business or research or development of IBM or its subsidiaries, or (b) are suggested by or result from any task assigned to me or work performed by me for or on behalf of IBM or its subsidiaries....

The above provisions concerning assignment of Developments apply only while I am employed by IBM in an executive, managerial, product or technical planning, technical, research, programming or engineering capacity....

Humm... restrictive. You invent a newer, better algorithm. It belongs to IBM.  You invent a better toaster, IBM is making your toast. You invent a slightly tastier pancake (impossible you say!, pancakes are already at maximum tastiness! Bah!), IBM is slathering Aunt Jemima all over it. An important note here is "hereby assign" this means today, not some point in the future. So when you develop something in the future, it is already assigned (in a temporal paradox no doubt) to IBM.  You are binding future you to assign things, i.e. you don't get to renege later.

I am pretty sure you know what happens next. Ms. Baker comes up with an idea (not important what) that she developed with the resources of IBM, while at IBM. IBM declined to advance the project further. Ms. Baker decided to take the technology on the road, do some more developing and file some patents.  Later, she decides that a whole bunch of people are infringing said patents, and brings suit....and looses.  Why?

Cause those patents belong to IBM.  Yea, she paid all the maintenance fees, all the filing fees and all the attorney time, but BIG BLUE takes the prize. Ms. Baker failed (or Ms. Baker's attorney failed) on two accounts. One, when the IBM's employment agreement asked her to list all currently developed(ing) projects that were outside the scope of the the IP agreement she wrote "None".  While it was possible that at the time of her signing, she had zero conception of the project, it is not likely. More likely, she didn't think the idea was worth putting down on paper at the time.

What's the lesson?  Always divulge (in confidence, so as not to be considered a disclosure under sec 102 et seq. ) all of you concepts. Sure some of them might sound stupid, or half baked, but you never know when you will develop them into the next killer app, only to have Megacorp take all the cash.  This is easily done with something like a spread sheet that gives a basic description that lists the things you are working on and thinking about. The downside to this is that if you are too descriptive, you run the risk of narrowing your room to claim broader inventions.

Two, do not use your corporate resources to pursue personal inventions or discoveries. They hate that. More importantly, using their equipment lends credence to the fact that you were doing it for them, and it belongs to them (while else would a company let you do stuff, if not for their benefit).

The back-up lesson you kids who skipped to the end is to make sure you read your employment contract thoroughly. If you don't understand something, ask a lawyer. If you are working for a place that has this kind of contact, and you develop something on your off time, as your lawyer how to make sure it does not instantly get grabbed by the boss.

Libertarians and IP

[Warning - random post on Legal Theory. This post could be a lot longer, but I have decided to break it into parts so that it is a bit more manageable for myself. ]

I have noticed a general upswing in the amount of Libertarian bloggers (and Neo-Liberal ones too) who have decided to come out on the negative side of general IP rights and protections.  While some of this is merely band-wagoning after the SOPA debacle, I think some of it comes from the general Libertarian concept that the enforcement of property (the tangible type) rights is the only reasonable use of governmental authority.

To avoid mis-quoting anyone, I will generally surmize the concept behind the Libertarnian objection to IP (as I understand it). This is going to be necessarily broad, so if you want to know what your favoriate Ron Paul Voter thinks, I suggest you look here, and here.

In general the Libertarian theory is more easily illustrated by the following theoretical.

Alice writes a piece of music and performs it to her own enjoyment in her yard. Rob, her next door neighbor, without trespassing, records the performance and uploads it to a file sharing site. Jim, a creative advertising executive, downloads the recording and uses it in a Super Bowl commercial. The commercial earns Jim wide acclaim, recognition and untold riches. Alice does not get any money or recognition. 

According to Libertarian theories, this is a perfectly acceptable outcome (if not the preferable one).  The argument underlying why this is O.K. is that Alice has never been deprived of her rights in the use and enjoyment of her property.  All that has been "misappropriated" is Alice's potential future ownership in the profits that Jim would have had to pay her in a regime where the government mediates these sorts of transactions. 

However, the Libertarian argument fails when you consider why you have a regime of Intellectual Property protection in the first place. Now, we could have a huge conversation on the dichotomy of the Moral vs. Economic Theory of Intellectual Property, but that is for another blog post.  Safe to say that the Constitution (Libertarians love the Constitution) spells out a moral theory of Intellectual Property.

   

   Article I, Section 8, Clause 8 of the United States Constitution empowers Congress:

   To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. 

By engaging in the "promotion" of Progress, Congress and the framers have set themselves a moral task that can not be easily superseded by claiming that the economics of "progress" are such that those rights should be limited to that which is tangible. The argument should never be focused on the "economic" rights of the IP holder, they are ancillary to the issue.  The government is charged with "progress";  how we as an economic and political system allow for maximization of progress, is tangential to the original goal. For example, if as a society, we decided that all musicians should be put on government stipend, then the original framers intent could still be met. Arguing that "progress" is met by not "promoting" is a laughable on its face, and clearly not borne out in reality. 

Libertarians run up against the fundamental problem that capitalism, practiced in the U.S. in the early 21st Century, requires that IP be priced in the market place. Destroying the pricing mechanism, without providing an alternative mechanism for "promoting" the arts and science yields only what Ayn Rand called "Moochers".  A society of takers, who, because there is no way to feed themselves from the sweat of their intellectual labors, find themselves shelving the potential of great work, because they live in a society that doesn't value it. That society asks people to create for the pure enjoyment of it, while also having a day job. There is a reason why this system does not work well. In order to re-order a system, people should at least acknowledged why the system was erected in the first place. As GK Chesterton noted, "one should know why a fence has been erected before one tears it down."

Jordan Garner

The Future

If only it were this easy

You will notice in the future that I will be putting forward some pretty random, reckless, speculative legal theorizing.  There is a point to this beyond satisfying my desire to investigate future legal developments that may never occur.  

I have a general theory about the future of Intellectual Property and how society will alter, and nurture the concept. Unfortunately, my overall thesis is a bit broad for this format.  Even more unfortunately, I am pretty sure I couldn’t convince anyone to pay me hash it out in one sitting.  Therefore, I have decided to use this forum to piece the concepts together and flesh out the ideas.  Eventually, if I like where I went, I might publish them all together as an ebook or something similar.

I will try to preface those posts with some sort of headline that tells the uninterested that they are about to be subject to some random dissertation concerning Economic Theory of Patents, Molecular manufacturing, Time Dilation and the Patent Office and why super villains must have great in -house counsel.


Jordan Garner


[Ed. Edited for random grammatical errors]

Start-up Ecosystems

As anyone who has read this blog (all 3 of you) know, I love ( more in the Storgian, as opposed to Erotic sense) infographics. It is an outgrowth of a background in Bioinformatics and a general appreciation of good graphic design. So what? All of this is just a haphazard way to introduce another nice infographic that I found the other day.

While I very much like the presentation found here, I take issue with the lack of attorney representation. Of all the people that Start-up founders love to hate, lawyers and especially IP attorneys, are in contention for the top spot.  This is in part due to a justifiable apprehension of the dreaded "Cease and Deist" letter.  However, I think it is also due to a lack of understanding about IP in general. I once spoke to a founder who told me "I don't want to deal with patents because it is too hard to know what's out there and who owns it".

While this may have been true a decade ago, the internet has vastly lowered the cost of entry into the Patent Searching game. Simple patent searches are key to a Founders due diligence. Anyone who wants to get cash from a venture capital firm should know before hand how to answer the question "does this infringe someone else's IP". It is essential to know the space you are working in, not only to know who your challengers are, but also who your investors might be. A patent search can let you find companies and individuals that are operating in the space.  Armed with this knowledge, you can track down investors who understand your technology and want to be a part of it.


Jordan G. Garner 
jgarner@leasonellis.com













Source: Udemy Blog