when the legal waters turn treacherous ...silver linings from cloud computing. with a tough new doj...

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INFORMATION, TREND-SPOTTING, AND ANALYSIS FOR SCIENCE AND TECH-BASED COMPANIES FROM MORRISON & FOERSTER LLP

FALL/wIN

TER 2009

RIVaLSof

antItRuSt cRackdown: Partnership deals under scrutiny

GettInG PeRSonaL: customer data gathering gets riskier

when the LeGaL wateRS tuRn tReacheRouS — comPetItoRS Become aLLIeS

GIVInG cRedIt: Vendor financing that boosts sales

cLImate chanGe: tracking your firm’s

carbon footprint

“ Companies are turning to ‘wall-crossed’ or ‘pre-marketed’ deals. Rather than announce an offering, the company’s investment bank takes the offer to a select number of institutional investors on a confidential basis.” —From “Scaling the Walls,” page 14

“ Sometimes [companies] gravitate toward joint defense arrangements.... Such cooperation can often save money and time…and perhaps even increase the likelihood of prevailing in court.” —From “Market Rivals, Legal Allies,” page 7

“ [ In the new DoJ regime,] tech companies may have cause for concern, as they often strike exclusive partnership deals to offset the risk of new product introductions... or serve a network of customers.” —From “Alliance, or Cabal?” page 4 “ Privacy and consumer rights activists have

fretted for years about the potential for companies to misuse personal data collected online. Now…they are getting an audience, and new regulations seem likely to follow.”

—From “Privacy, Please,” page 6

“ The Levine decision could result in a surge in product liability litigation in state court, which in turn may have a dampening effect on product research and development.”

—From “Preempting Preemption,” page 16

“ Regulations will be wide-ranging.... [And] as more large companies are required to report emissions, they will ask their suppliers…to certify to their own carbon footprints.” —From “Carbon: Tread Lightly,” page 11

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MoFoTech

This is clearly a time for innovative thinking—and action. The economic downturn has challenged every company, whether it’s searching for financing, attempting to be ready for post-recession market demand, or simply trying to stay afloat until the recovery reaches its doors. But the challenges aren’t just recession-based. They’re rooted in technology, in legislation, in finance, and more. And they’re reflected in every article in this issue of MoFo Tech.

Start on page 2, with a reevaluation of poison pills: perhaps they’re good for you, after all. Then: Data security issues are ripping the silver linings from cloud computing. With a tough new DoJ regime, partnership deals may be suspect. New accounting standards are changing M&A. Rivals are joining forces to fight patent litigation. Wall-crossed deals have new cachet. Are these problems or opportunities? Challenges or calls to action? See what you think.

INFORMATION, TREND-SPOTTING, AND ANALYSIS FOR SCIENCE

AND TECH-BASED COMPANIES FROM MORRISON & FOERSTER LLP

FALL/WINTER 2009

7Log In 4 Harnessing genetics and technology

through personalized medicine. Plus: Poison pills are back.

3 | Focus 4 Cloud Cover: Considering cloud

computing? Stay grounded on data security issues.

4 | Aggregator 4 With a new regime at the Department

of Justice, that partnership deal could land you in hot water with the Feds.

4 For biotechs, it’s deal or die.

5 | Support 4 To jump-start sales during downturns,

look to vendor financing. 4 New accounting standards are forcing

M&A executives to rethink traditional contingency-based considerations.

6 | Critical Mass 4 Federal authorities take a harder

look at personal data collection. 4 And broadband for all…

Cover Story

Market Rivals, Legal AlliesForming alliances when your competitors face a common foe.

A new era of cooperation among tech rivals has been spurred by a recent explosion of patent litigation.

We may soon have up to 1,000 health facts available for each patient. What we are missing is a way to allow exchange of this information both quickly and transparently.

—Dr. Patrick Soon-Shiong, executive chairman, Abraxis BioScience, page 2

11First MoverCarbon: Tread Lightly As global regulations force companies to reduce and report their carbon out-put, a new breed of software emerges.

14DatagramScaling the Walls: Companies are turning to innova-tive approaches to financing.

16RebootPreempting Preemption: A Supreme Court ruling on liability leaves companies in the lurch.

2THE 411

Printed on recycled paper.

Michael Meehan, ceO carbOnetwOrks

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>>POISON PILLS: Back in the Cabinet

As depressed stock values turn legions of tech companies into juicy acquisition targets, takeover defense measures known as poison pills have seen a resurgence, even as they’ve proven to be as popular as arsenic with shareholder-rights groups.

Undervalued tech firms would be foolish not to have a poison pill at the ready, says Craigh Leonard, Senior Of Counsel in Morrison & Foerster’s New York office. When used properly, the pill can actually help protect shareholder value in the event of an unsolicited offer. “A poison pill gives a board leverage to say to a bidder: You’ve got to come up with a better offer, or else,” Leonard says.

Michael O’Bryan, co-chair of Morrison & Foerster’s Mergers & Acquisitions Group, says “boards are still mindful of the heightened concerns of their shareholders when designing or implementing poison pills.” For example, many boards adopting poison pills today are limiting their duration. “While the standard 1990s-era poison pill lasted 10 years,” he says, “many now expire after two or three, and some boards seek shareholder ap-proval for pills that will last more than a year.” M

—Jennifer Pilla Taylor

magine you’re a patient suffering from a chronic disease such as rheumatoid arthritis. Since your diagnosis a year ago, you’ve visited more than a dozen physicians who have prescribed a multitude of med-icines. Imagine the hassles of trying to ensure all of your doctors know how the others are treating you, what they are prescribing, and how those drugs may affect your health and interact with one another.

Now imagine a Facebook-like system where you could “friend” your doctors to let them view your health-related information. That’s the vision of self-made billionaire Patrick Soon-Shiong, who is donat-ing $1 billion to an established foundation as part of his philan-thropic efforts to create a national health grid that he expects will have an impact on the U.S. as dramatic as the interstate highway system. The goal is to provide greater transpar-ency for physicians and patients, and better manage illnesses and treatments by leveraging the power of “personalized medicine.”

“As genetic and genomic information becomes more readily available, we soon may have up to 1,000 health facts available for each

particular patient,” notes Soon-Shiong, executive director of the UCLA Wireless Health Institute and executive chairman of Abraxis BioScience, Inc., a Los Angeles-based biotech firm dedicated to deliver-ing therapeutics and technologies that treat cancer and other illnesses. “What we are missing today is a way to allow exchange of this information both quickly and transparently.”

As the health care reform debate spotlights issues of cost and efficien-cy, “personalized medicine,” with its promise of targeted and customized treatment, is offering some answers, while also raising important issues.

“We’re likely to see a more tailored approach to delivering medical treatment,” says Catherine M. Polizzi, co-chair of the Intel-lectual Property Group at Morrison & Foerster. She sees personalized medicine as having an impact on both sides of the cost-benefit ratio under such a system. “Take Che-motherapy Treatment X, which has demonstrated efficacy for cancer patients with certain genetic mark-ers,” she says. “It’s likely doctors may prescribe the drug only to those patients, thus leading to a higher success rate. However, if you are a

[ LOG IN ] By Jamie Lacey-Moreira

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Harnessing genetics and technology through personalized medicine to improve treatment and reduce cost

1 Patient, 1,000 Health Facts


patient without the biomarker, then you may be denied treatment.”

If personalized medicine becomes more mainstream in our health care system, the outcome of Bilski v. Kappos—a case being considered by the U.S. Supreme Court that addresses so-called busi-ness methods patents—will become even more important to the biop-harma industry, Polizzi says. Biotech patents often involve methods or pro-cesses. If the Court upholds current restrictions on the eligibility of busi-ness method patents, biotech firms fear the door would be closed on medical innovations. (See “For Some Patents, a Tough New Test,” p. 10.)

Another key to fulfilling the promise of personalized medicine is protecting patient data. “The infor-mation collection side of personal-ized medicine is at a turning point,” says Geoff S. Ginsburg, director of the Center for Genomic Medicine at Duke Institute for Genome Sciences & Policy. “To get people to partici-pate in genetic testing programs, they need to feel protected.”

The U.S. lacks an omnibus law related to privacy, and regulations have been delayed for the Genetic Information Nondiscrimination Act of 2008, which President Bush signed into law in May 2008.

“In the U.S., there is no one-size-fits-all when it comes to laws regu-lating how health-care information is used,” says Morrison & Foerster partner Christine Lyon. “Even as an employer, you likely face uncertainty in terms of what regulations to com-ply with and how to actually comply with those regulations.”

As lawmakers struggle to play catch-up, industry is charging ahead to fulfill the promise of personalized medicine through health IT im-provements and targeted therapies. “Molecular medicine can signifi-cantly affect your life today,” Soon-Shiong says. “We have magnificent research and tools, diagnostics and probes, which can provide more insights into your disease as well as affect the treatment prescribed.” M

[ FOCUS ] By Jennifer Pilla Taylor

Cloud CoverConsidering cloud computing? Stay grounded on data security issues.

The cost savings and scalability offered by cloud computing help to explain why the idea has taken the IT community by storm. But increasing enforce-ment of data security regulations worldwide is forcing some of the murky legal issues surrounding cloud computing into the light, says Chris Coulter, a partner in Morrison & Foerster’s London office.

In cloud computing, a vendor keeps data and data applications at a location separate from the customer. Many companies have shied away

from clouds due to concerns about the security of customer information. Others simply took the risk of running afoul of data security law. Now that risk is mushrooming, as U.S. Federal Trade Commission and European Com-mission regulators crack down.

“Increasingly, regulators are show-ing a willingness to levy fines and impose injunctions,” says Coulter. “It seems likely that as time goes by, vendors will have to increase transpar-ency as to where and how information is stored as part of their offering.” Mda

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by shifting customers’ information to servers around the world, the cloud boosts efficiency—and sets up potential legal pitfalls. For example: under an EC directive, personal data can’t be moved out of the Eu to a country lacking adequate privacy protection laws. (One such country: the u.S., which is addressing this through a “safe harbor” agreement.)

Cross-Border Issues, Even in the Clouds


TAlliance, or Cabal?That partnership deal could land you in hot water with the Feds

[ AGGREGATOR ] By Gail De George

been watching for signs of the get-tough stance. While there have been few actions so far, “there is a lot of rhetoric that DoJ will be more ag-gressive, and that is already having an effect,” says David Meyer, partner and co-chair of the Global Antitrust Group at Morrison & Foerster.

Tech companies may have cause

ech firms may find that common industry practices could put them square in the spotlight of regula-tors under the watch of Christine A. Varney, the nation’s new top antitrust cop.

Appointed in April, Varney wast-ed no time declaring a new era after the laissez-faire approach of the Bush administration. “We cannot sit on the sidelines any longer—both in terms of enforcing the antitrust laws and contributing to sound competition policy as part of our nation’s economic strategy,” she said in a speech in May, just weeks after taking office as assistant attorney general at the Justice Department.

More telling, she lambasted a report by the previous administra-tion that sought to give guidelines to companies in dominant industry positions. Stating that the report no longer represented DoJ policy, Var-ney said it “effectively straightjackets antitrust enforcers and courts from addressing monopolistic abuses, thereby allowing all but the most bold and predatory conduct to go unpunished and undeterred.”

Since then, antitrust experts have

Partner, purchase—or pick over? Pharma players are mulling all options amid a turbulent economic environment. Having completed a number of mega-mergers earlier this year, Big Pharma players are starting to snap up smaller biotech compa-nies with which they partnered. One example: Bristol Myers Squibb’s $2.4 billion deal for Me-darex, a partner in a promising

cancer drug. Given the existing relationships and track records, such deals are “really a safe course,” says Michael O. Braun, a partner in Morrison & Foerster’s New York office.

But Big Pharma has another option: Smaller biotech compa-nies abandoned by VC funders are being forced into bankruptcy, where they must sell promising products and research to satisfy

creditors. Oscient Pharmaceuti-cal, of Waltham, Massachusetts, for example, filed for Chapter 11 in July, sold its chronic bronchitis drug for $5 million, and sought a buyer for a cholesterol treat-ment.

In many cases, pharma com-panies may find it tempting to “wait for a bankruptcy and then cherry-pick the products they want,” Braun notes. —G.D.

Pharma: For biotechs, it’s deal or die>>

for concern, as they often strike ex-clusive partnership deals to offset the risk of new product introductions, guarantee a component supply, or serve a network of customers. Under the new regime, “there would be a greater inclination to see something wrong with exclusive dealing ar-rangements in which one company has a significant market position, and then to do something about it in court,” Meyer says.

Market-dominating giants such as Microsoft are expected to come under particular scrutiny. But the more interventionist Depart-ment of Justice will be somewhat counterbalanced by courts that may disagree with the administra-tion’s views, Meyer says. As a result, Justice is expected to pick its battles carefully to avoid an embarrassing loss in court. M

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Where Credit Is DueWhile businesses expend an increas-ing percentage of their budgets on technology, the recession has nar-rowed financing options for the ac-quisition of software and hardware—and when customers are less able to pay, tech companies feel the pinch. A viable alternative is vendor financ-ing, whereby a tech company, with third-party financial backing, extends credit to customers to facilitate a sale.

William S. Veatch, a corporate partner in Morrison & Foerster’s San Francisco office, has coined his own term for this vehicle—“technology receivables financing,” or TRF—and says that while its popularity tends to be cyclical, revolving around downturns, it is especially timely in the current environment.

“Many companies were caught off-guard by the recession, thinking it would not affect their technology purchasing,” says Veatch. “TRF is

To jump-start sales during downturns, look to vendor financing

leader CIT Group Inc., as deepening financial woes related to the down-turn sank CIT’s credit rating and made it a bankruptcy risk. Microsoft, along with Oracle and GE, is among several big companies that tradition-ally work with partners to provide financing to customers.

Customer demand for financ-ing is a common driver behind the launch of vendor finance programs, but Veatch cautions companies entering the field to be careful: “If you don’t outsource this function to a third-party financial institution, you may inadvertently find yourself in the business of lending money—with all the associated risks.”

Selling globally may be as easy as clicking a mouse, but with vendor finance, the legal issues are anything but straightforward. “There is no uniformity of law in this field,” says Veatch. “Even in the European Union, the laws differ from country to country.” Another sticky area lies in revenue recognition: in the wake of recent accounting scandals, the governing rules and guidelines are stricter than ever. “TRF programs are a viable option in good times and bad,” says Veatch, “but vendors and end-users alike should not go in thinking it will be easy.” M

[ SUPPORT ] By Jeff HeilmanrO

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The new rules of M&AContingency-based considerations remain useful for bridging the valu-ation gap between buyers and sellers. But new accounting standards will force M&A executives to rethink this strat-egy. n Take the case of earnouts, a post-closing payment from the buyer to the seller if the tar-get business meets specified financial targets or perfor-mance milestones. n “Traditionally, earnouts were not structured to allow precise calculation at closing, and were therefore normally recorded post-ac-quisition,” says Lawrence R. Bard, a corporate partner with Morrison & Foerster. “Under FAS 141(R), the FASB’s new stan-dards for business combinations, buy-ers must now record earnouts and other contingency-based considerations at their fair value on the acquisition date.” n Depending on how the target business performs, this can produce greater post-closing volatility, ultimately affecting the buyer’s earn-ings. The bottom line? “Economics should continue to drive M&A decision-making,” says Bard, “but companies should be aware of the impact of FAS 141(R) when they structure their transactions.”

a way of getting back on track, es-pecially when it comes to retaining critical market share in advance of economic recovery.”

Structured properly, TRF, covering anything from data storage to medical equipment, can be a win-win for both parties. End users benefit in several ways, says Veatch, including being able to spread out large payments over time and securing favorable, vendor-sub-sidized financing terms. For vendors, TRF means increased (and faster) sales, improved cash flow, and main-taining that all-important competitive edge. “Most significantly,” says Veatch, “because these deals are non-recourse to the vendor, the finance company bears all the credit risk.”

According to research company IDC, businesses financed about $88 billion worth of computer hardware and software in 2008, or roughly 14 percent of all such purchases. It’s not always smooth sailing, however. In July, Microsoft announced it was dis-solving its 2006 five-year financing deal with one-time global lending


PPrivacy, Please

rivacy and consumer-rights activists have fretted for years about the poten-tial for companies to misuse personal data collected online. Now, with a change of power on Capitol Hill, they are getting an audience, and new regulations seem likely to follow.

Take the Data Accountability and Trust Act, a bill that directs the Fed-eral Trade Commission to develop corporate data security regulations. The bill had been introduced for several years running, but this sum-mer, the House Energy and Com-merce Committee held hearings, and “it suddenly feels like this might go somewhere,” says Andrew M. Smith, a partner at Morrison & Foerster and former program manager at the FTC.

The irony of the timing, Smith says, is that industry had long sought a single federal bill, rather than the patchwork of 45 state laws that developed as the Feds dithered. But now companies have adapted to the myriad laws, Smith says, and in any event the current House bill doesn’t clearly preempt that state

Federal authorities take a harder look at personal data collection

another front: Last February, the agency issued final guidelines for the self-regulation of behavioral advertising. Calling it “the last best chance” for industry to regulate it-self, “the agency has clearly signaled it won’t wait forever before formu-lating its own rules,” says Morrison & Foerster partner Reed Freeman.

Behavioral advertising—where ads are placed on selected Web pages based on the interests of consumers, as gleaned from prior mouse clicks—has been around for nearly a decade. But consumer advocates took note in 2007, when Google bought advertis-ing service provider DoubleClick. Suddenly, companies’ notice of their behavioral tracking—typically buried deep inside their lengthy privacy policy—didn’t seem sufficient to the FTC. It’s now requesting that compa-nies prominently disclose their track-ing and give consumers the ability to easily opt out.

Industry groups have been working vigorously to respond with guidelines, which are expected to launch early next year. “The biggest issue remains who will be respon-sible for compliance,” Freeman says. “The publisher? The advertising service provider? The advertiser? Ad agencies? It’s a significant burden to ensure the notices appear, and to keep track of the opt-outs.”

Of course, everyone is keenly aware that if the industry doesn’t resolve these issues, and the FTC feels compelled to issue regulations, the burden could very likely feel even greater. M

[ CRITICAL MASS ] By Meryl Davids Landau

Tucked into last winter’s federal stimulus bill was an item that certainly could stimulate business in the communications industry: a directive for the FCC to bring Congress a national broadband plan.

“Broadband is increas-ingly seen as being as important to infrastruc-ture as railroads and

interstate highways have been,” says William Maher, Of Counsel to Morrison & Foerster. “The government wants everyone to have access, especially in unserved and underserved areas.”

Topics that could be covered by the FCC plan, due February 17, include transmission speed

standards, the provision of radio spectrum for broadband, and subsidies to build the networks. To ensure all stakeholder voices are heard, the agency is going Web 2.0: it’s gathering the usual written comments, host-ing online workshops, and regularly posting blogs.

And Broadband for All...>>

oversight. “Rather than being one requirement, this would just be the forty-sixth,” he says.

Most companies currently have robust security procedures, and fed-eral laws already require them for key sectors such as the financial industry. But while most state laws only cover notification requirements in the event of a breach, the federal DATA bill also covers the secure handling and disposal of personal data.

Meanwhile, the FTC has been keeping corporations busy on

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Forming alliances with your competitors when you face a common foe

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[ COVER STORY ] By Richard Sine

Market Rivals,Legal Allies

he law, like politics, can make for strange bedfellows. Companies that may compete avidly for market share, talent, and investment find themselves united against a com-mon foe—or in support of a com-mon cause—in the legal arena.

Sometimes they gravitate toward joint defense arrangements. Increasingly, they are agreeing to joint representation by a single law firm, which can offer a greater degree of efficiency. They may co-file briefs in an attempt to influence a particularly important ruling. Or they may simply provide key evidence to help a rival’s case. In any event, such cooperation—if handled well—can often save mon-ey and time for all parties involved, and perhaps even increase the likelihood of prevailing in court.

A COmmOn FOEA new era of cooperation among tech rivals has been spurred by an explosion of patent litigation begin-ning in mid-2007, in which patent holding companies increasingly sued multiple defendants, says Lisa McFall, former vice president and associate general counsel at Yahoo!

and now managing director of Ovidian, a global IP asset manage-ment and business advisory firm based in Berkeley, California. Many of these patent holding companies had picked off patents from the remains of companies that had gone bust in the aftermath of the dot-com boom. In their quest to monetize these patents, they discovered the very plaintiff-friendly U.S. District Court of Eastern Texas. Rather than suing one or two companies at a time, patent holding companies increasingly sued five, 10, 20, or even more companies in a single case.

Companies in these multi-defendant cases quickly learned of the necessity of coordination, as they were placed in a situation where the plaintiffs and defendants were often given equal time and consideration, no matter how many parties were on each side. While the plaintiffs have the luxury of more time to state their case, defendants must share and carefully allocate their time when taking depositions before trial and questioning witnesses during trial.

Likewise, judges often prefer or expect defendants to speak with one voice, McFall says. For example, a

Illustrations by Kurt Ketchum


judge is likely to be put off if he or she is confronted with several defen-dant briefs with different interpreta-tions of patent claims during the so-called Markman hearing stage of a patent trial. In that case, he or she would be more likely to simply adopt the plaintiff’s interpretation.

To succeed in a joint defense group, attorneys must balance an instinctive inclination to narrowly consider only their client’s interests, McFall says. “When you’re thrown into a situation where you have to coordinate with other defendants, you realize quickly that you need to work together, or you all could lose,” she says. “The plaintiff has the advantage of simplicity, while your side could be hampered by chaos. If the defendants take positions con-trary to one another, most plaintiffs will exploit that to their advantage.”

The law allows firms that share a common legal interest to share in-formation without losing attorney-client privilege. Parties often enter into joint defense agreements to formalize their litigation relation-ship. That agreement also reduces

the chance of disclosure of confi-dential information by establishing a system for classifying and sharing sensitive documents. This agree-ment also addresses the possibility of conflicts of interest.

Defendants may sometimes split into multiple groups, each with their own counsel, depend-ing on their interests, says Vincent Belusko, a patent litigator based in Morrison & Foerster’s Los Angeles office. In any case, joint defense groups tend to work efficiently in certain areas of patent litigation and founder in others.

For example, joint defenses tend to work well in cases where the defendants’ primary strategy is to challenge the validity of the plaintiff’s patents, Belusko notes. That’s because such claims hinge on public, rather than proprietary, information. Defendants can save labor costs by pooling efforts to research and analyze the prior art that suggests that the patent holder was not the first inventor. Or they can make common charges based on flaws in the way the patent was

written or enforced. By contrast, cases that hinge on

infringement claims by the plaintiff can be much more challenging to coordinate. Each defendant may be alleged to infringe the patent in different ways, depending on how the technology is implemented. As a result, each defendant’s argument that infringement has not occurred will tend to differ. Furthermore, defendants may be reluctant to share proprietary details about their products with their competitors in an effort to coordinate a defense.

In later phases of a case, coordi-nation becomes more challenging. For example, coordinating dam-age claims can present a problem because such claims depend on financial information about profits that companies guard jealously. But settlement is where joint defense groups are most likely to stumble. To conform with antitrust law, de-fendants must be given the freedom to negotiate separate settlements with the plaintiff, Belusko explains. But this can create problems when defendants settle and drop out of a

Federal court rulings can have a major impact on your business even if you’re not a party to the case, but the judges may have little awareness of that impact. Hence the importance of the amicus brief.

When filed by trade associations, these briefs demonstrate that an industry speaks with a unified voice, says Brian Matsui, a partner with Morrison & Foerster. Filing as an association allows individual companies to avoid the taint of connection with a plaintiff or defen-dant whose actions may not have been entirely benevolent.

Sometimes major industry players can make more of a splash by identifying themselves by name. In a crucial case, both strategies are employed: In the Bilski case to be heard by the Supreme Court (see sidebar, p. 10), several life sciences companies have filed their own briefs in addition to their professional associations, BIO and PhRMA.

If a company openly allies itself with a serious rival, it can really grab the court’s attention, says Robin Conrad, executive vice presi-

dent of the National Chamber Litigation Center, the public policy law firm for the U.S. Chamber of Commerce (and one of the nation’s most prolific amicus filers). For example, in amicus briefs and litiga-tion, the Chamber has allied with labor and human rights groups to challenge state laws that impose sanctions on companies that hire undocumented immigrants.

There is ample evidence that amicus briefs have a significant influ-ence on the Supreme Court. A recent study in the Georgetown Law Review found that the Court grants review of only about 2 percent of the cases brought before it. But with the filing of even one amicus brief in support of a review, the odds grew to nearly 20 percent. Four or more led to an acceptance rate of more than 50 percent.

In intellectual property cases, it’s often worthwhile to file amicus briefs at the federal circuit level, says Matsui: “The federal circuit ends up being the law for a lot of issues in IP.”

Amicus Briefs:When rivals turn friends (of the court)

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case, leaving the final defendant to contemplate going to trial alone.

That sole defendant can be left in an extremely difficult position when the departing defendants had agreed to take on tasks such as prepar-ing witnesses and demonstrations. Aware of this vulnerability, some plaintiffs will offer a “sweetheart” settlement deal with a defendant that has played a key role in prepar-ing for trial in an attempt to throw the defense into chaos.

One way for defendants to prepare for this worst-case scenario is to create redundancies, says Belusko. More than one defendant will share tasks, such as working with an expert, in case one of those defendants drops out before trial. Of course, this eliminates some of the potential efficiencies of a joint defense.

Mutual planning is also impor-tant to ensure that everyone’s interests are considered for the duration of the case, says Mallun Yen, vice president of IP at Cisco Systems and an early advocate of defense groups in certain types of patent cases.

“It’s important to openly discuss each company’s view regarding trial strategy versus settlement strat-egy, which can minimize—but not eliminate—the concern that your co-defendant’s strategy and yours will diverge,” she says.

But one of the cleanest ways of minimizing the settlement problem is for multiple defendants to be represented by a single firm—a strategy known as joint represen-tation. With this strategy, even if only one defendant remained at the time of trial, the same firm that had handled the case from the outset would still be running the case.

A unIFIEd VOICEJoint representations are growing in popularity as a powerful way to re-duce costs and increase efficiencies in multiple-defendant cases. Some-times a firm will represent every defendant in a case, and other times just a group of those defendants. In either case, joint representation may improve the overall quality of the defense—and thus the odds of prevailing—because it avoids situa-tions where several defendants are working at cross-purposes.

Joint representation can be an especially advantageous strategy when there is already a close work-ing relationship between co-defen-dants’ in-house counsel, says Yen of Cisco Systems. “When we have that relationship, we get the benefits of strategizing with them in ways that can help confirm our views of the case or properly and helpfully chal-lenge some of the assumptions we may have made,” she says.

“Joint representation can also decrease the cost of defense—not only through sharing the cost of developing the common defens-es, but also because it decreases the amount of time outside counsel for different defendants spend discuss-ing case issues with each other,” Yen adds. “But a joint-counsel situation transfers some of the burden of such discussions to in-house counsel, so [that] close working relationship with the co-represented party’s in-house counsel is important.”

Joint arrangements tend to work best when the defendants have roughly similar levels of legal expo-sure, experts say. In cases involving a defendant’s core technology, joint representation (and joint defense generally) can be challenging be-cause that defendant may have little

inclination to make concessions in the interest of the group. Fortu-nately, Ovidian’s McFall notes, many technology firms sued by patent holding companies are discovering that the patents involved are low in quality and do not involve core technologies. The defense often hinges on the patent’s validity, rather than on infringement claims. So it is relatively easy for defendants to agree on claims constructions and to share a common strategy.

Cases involving technology stan-dards frequently lend themselves well to joint representation, Belusko notes. In those cases, the defense may hinge on infringement, but the technology has been implemented in a similar way in each defendant’s product, so all defendants will have a similar argument regarding non-infringement.

Defendants that choose joint representation may be concerned that the joint firm may favor one client over another, especially if some of the defendants already have long-term relationships with that firm. Firms are ethically required to disclose potential conflicts. But it is possible that a firm can fail to spot a conflict, or may be overly preoc-cupied with the need to economize or to keep the case moving forward. Therefore, it’s critical for defendants to keep in regular contact with the joint firm.

There are also measures joint firms can take to ensure that all de-fendants are given due attention. For example, when Morrison & Foerster handles joint representation, a core team works on shared aspects of the case but, in some cases, a separate partner is assigned to each client, says David Doyle, a partner in the firm’s San Diego office. This strategy

“ Joint representation can also decrease the cost...because it decreases the amount of time outside counsel for different defendants spend discussing case issues with each other.” —Mallun Yen, CisCo sYsteMs

1 0 M O F O T E C H F A L L / W I N T E R 2 0 0 9 W W W . M O F O . C O M / M O F O T E C H

may prove useful if the case goes to trial, because each defendant can present “a separate face” to repre-sent its interests before the judge and jury, he says.

mORE wAYS TO HERd CATS Joint representation could be a particularly effective strategy for IP-related cases heard before the U.S. International Trade Commission, notes Alexander Hadjis, a Morrison & Foerster patent litigator based in Washington, D.C. with extensive ex-perience in ITC cases. (Companies petitioning the ITC for a so-called Section 337 investigation seek to block, or “exclude,” importation of goods based on violations of intel-lectual property rights.)

More complainants are naming multiple defendants in ITC cases, thanks to a recent federal circuit court ruling that ITC exclusion orders apply to named defendants. In response, many defendants are forging joint defense arrangements. But ITC cases proceed more quickly than most district court cases, and defendants must move quickly to adapt. “Joint representation can be beneficial because it is important to coordinate, and to do it early on,” Hadjis says. “Sometimes obtaining agreement on litigation decisions from attorneys from multiple firms is like herding cats. In the ITC, the

enhanced speed constraints can am-plify that dynamic. So, if the respon-dents have consistent interests, joint representation is the way to go.”

SHARIng ExpERTISEThe cost savings that companies gain from joint representation don’t always arise from situations where a single firm represents several defendants in a single case. Sometimes a company will turn to a firm that has developed an expertise on a highly contested patent portfolio and is willing to share that expertise with several companies. In these cases, the firm can spread out the cost of developing that expertise among several clients.

For example, in the mobile phone world, Morrison & Foerster has represented up to four differ-ent companies at different times in litigation around a particular set of patents. “This arrangement works smoothly if the companies don’t see each other as particularly intense rivals and the plaintiffs claim that their technologies are covered by the same group of purportedly broad patents,” says Doyle.

A related form of joint represen-tation can be found in the world of life sciences. Doyle and his col-leagues have developed expertise on a diagnostic testing technology called lateral flow. Most such pat-ents reside with a single company,

Inverness Medical. But Doyle and his colleagues have represented three companies in separate cases brought by Inverness and they have advised numerous other compa-nies on how to develop lateral-flow products to avoid such litigation.

Doyle’s clients are aware that he works with their competitors, but that is outweighed by their desire to tap into his experience in fighting—or forging deals with—Inverness Medical.

nOT YOuR EnEmYIn the past couple of years, tech firms have awakened to the value of banding together to battle com-mon foes, says Ovidian’s McFall. For example, even when they are not parties to a lawsuit, companies are frequently asked to search for technology and product informa-tion to use as prior art in cases brought against their rivals by pat-ent holding companies. Though such searches can be arduous, many companies cooperate out of rec-ognition that they may be the ones asking for such art in the future.

In working with competitors, companies understand that such good citizenship can redound to its own benefit in the long run. “Sometimes your enemy is not your competitor,” McFall says. “It’s the plaintiffs.” M

The U.S. Supreme Court’s decision in Bilski v. Kappos promises to be the most important IP-related case of the year—even more im-portant than press reports suggest. “The press has reported this as a decision about whether business methods are patentable,” says Deanne Maynard, chair of Morrison & Foerster’s Appellate and Supreme Court practice; Maynard represented the govern-ment in the Bilski case when she was assistant to the U.S. solicitor general. In fact, she says, the case involves the standard for the patentability of processes—a broader category that includes much more than just business methods.

In a flurry of briefs to the Court, software, Internet, and life sciences companies have urged the Court to overturn the Federal

Circuit’s ruling in Bilski. They say that court imposed an overly rigid eligibility standard for process patents, effectively stifling innovation. For example, the biotech industry has argued that the eligibility standard would make it difficult to patent diagnos-tic tests, explains Morrison & Foerster associate Otis Littlefield. This could slow the progress of personalized medicine (see related article, “1 Patient, 1,000 Health Facts,” p. 2). The government says the Federal Circuit ruling conforms with Supreme Court precedent, Maynard notes, and that Bilski’s method of hedging risk is not patent-eligible.

Arguments before the Court are scheduled for November 9, and the opinion will be released before summer. –R.S.

For Some Patents, a Tough New Test

Market Rivals, Legal A

llies

F A L L / W I N T E R 2 0 0 9 M O F O T E C H 1 1W W W . M O F O . C O M / M O F O T E C H

Anew breed of software firm is jockeying to fill a growing demand by companies for help managing their carbon emissions. The sector has mushroomed as corporations implement more environmentally friendly practices and the regulatory landscape pressures businesses to reduce their carbon footprint.

“The number of carbon footprinting companies has soared over the past 12 to 18 months, since it became clear a year ago that there was either going to be cap-and-trade or some regulated cap on carbon and other greenhouse

gas emissions,” says Susan Mac Cormac, a partner and co-chair of the Cleantech Group in Morrison & Foerster’s San Francisco office.

The number of firms producing carbon manage-ment software has tripled to 30 in the past three years, according to the independent sustainability analyst Verdantix Ltd. U.S. and global regulations will be wide-ranging, forcing companies to report and reduce their carbon output. Emitters both private and public, both heavy and light, will be affected, adds Mac Cormac.

[ FIRST MOVER ] By Cynthia L. Webb

Carbon: Tread LightlyCompanies of all sizes need help measuring and reducing their carbon footprint

AMY

NIN

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R M

OFO

TEC

H


“ THE CLIEnT WInS, THE TECHnOLOgy WInS, And THE EnVIROnMEnT WInS.” MICHAEL MEEHAn co-founder and ceo carbonetworks

F A L L / W I N T E R 2 0 0 9 M O F O T E C H 1 3W W W . M O F O . C O M / M O F O T E C H

Also, as more large companies are required to report emissions, they will ask their sup-piers (and the suppliers of their suppliers) to certify to their own carbon footprints.

Amid this crop of newcomers stands San Francisco-based Carbonetworks Corp., which was founded more than a decade ago. Michael Meehan, co-founder and chief executive, majored in environmental studies at Canada’s University of Victoria. A class discussion sparked him to start developing software that would mine data to compare the cost of reducing emissions to the cost of purchas-ing carbon offset credits. With reductions, “the client wins, the technology wins, and the environment wins,” says Meehan, 39.

After a decade spent developing the soft-ware, Meehan joined with Stephen Mooney, whom he had met in 2004 while the two were studying for their MBAs, and incorporated Carbonetworks in 2005. They landed their first client, an energy utility, in 2006. “It took a long, long time,” Meehan says. “It is a big, big product. I kind of grew up in software while building the company.”

The now 32-person company started on a shoestring “at a time when very few people in the world realized the issues with climate change and the value of carbon,” says Mac Cormac. What makes Carbonetworks unique, Mac Cormac she says, is that its software helps companies track their carbon emissions and monetize their market value, crucial under cap-and-trade schemes.

Carbonetworks’ Web-based software al-lows companies to achieve their sustainability goals and GHG reduction targets. They can see how much energy, carbon, and waste they use and emit from various facilities and then track plans to cut emissions. They can also access Carbonetworks’ online network of 370 companies to share resources and carbon-reducing services.

Companies and investors alike are discovering the software’s value. “It’s now a business reality that large companies need to track, manage, and report their carbon emis-sions to shareholders, nonprofits, and top customers,” explains Paul Baier of Massachu-setts-based Groom Energy Solutions. “Com-panies like Wal-Mart, HP, IBM, and Bank of America are starting to require reporting of

carbon emissions from their suppliers.”Carbonetworks landed $5 million from

NGEN Partners last July and has continued to raise capital in 2009. Other companies have nabbed small deals, notably Hara Software, which raised $6 million last year and $14 million in September. Competitors include California firms Enviance and Planet Metrics Inc. EnerNoc Inc. acquired Boston-based eQuilibrium Solutions Corp. in June, and SAP AG bought Clear Standards Inc. in May for undisclosed terms.

“The amount of funding in the sector has actually been very small,” notes Verdantix Director David Metcalfe, pegging it at less than $50 million worldwide. “It’s minute compared to, say, renewable energy technolo-gies. Firms have secured funding because the Cleantech sector software is much lower-cost than the more capital-intensive propositions, and because there are many drivers behind corporate demand for carbon management.”

Competitors are now in the midst of a land grab for market share. “At this stage in the market the key differentiator for any firm is that their customer wins,” says Metcalfe. “The functionality is not complex or patented, so winning customers is the key.” The better funded start-ups, “have broader functionality than other firms, and that means they are bet-ter positioned to pick up customers.”

Analysts expect demand for these compa-nies’ to be sustained, particularly with pend-ing climate change regulations. In June, the House passed the American Clean Energy and Security Act, which included provisions for clean energy technology and energy ef-ficiency, including a cap-and-trade system for carbon emissions starting in 2012. And carbon use will be at the forefront at the U.N. Framework Convention on Climate Change meeting in Copenhagen in December.

Carbonetworks’ customers, like construc-tion management firm Omnibuild LLC, have begun to realize the value of this software. Omnibuild uses the software to help clients determine cost savings when considering various sustainability projects. The software also flags areas where energy—and cost— savings can be realized. “Green is great, but the real green is money,” says Project Man-ager Bassam Tarazi. M

Share your Tech To Save the Planet

Winning the fight against climate change will require sharing green technologies between developed and developing countries. The tech transfer issue will take center stage in the coming months, as it’s a central theme of international climate change negotiations, say Morrison & Foerster partner Tessa J. Schwartz and associate Sarah Tierney niyogi.

Companies tempted to share their technology with the develop-ing world may be daunted by issues such as poor infrastructure, lack of financing, untrained workforces, trade barriers, and poor protection of intellectual property rights. But if done properly, tech transfer can help companies establish new markets and create good PR, Schwartz says.

One rule is to choose your markets, and your entry strategies, carefully. In certain countries, busi-ness partners may prefer to license in your technology and manu-facture the product, while less technologically advanced countries may seek ready-built products and components. Another suggestion is to look out for subsidies, tax ben-efits, and other incentives offered by countries to sweeten the pot.

Finally, consider banding with other companies seeking to boost the bottom line and the greater good. groups such as the Alliance for Clean Technology Innovation, greenXchange, and the Eco-Patent Commons have formed to facilitate open innovation and green tech sharing.

[ FIRST MOVER ] Carbon: Tread Lightly

MArk br

AMleY FO

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Choose your markets, and your entry strategies, carefully.

Source: ECM analytics, FactSet. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings and offerings less than $10 million. Proceeds include overallotment amount. Courtesy of Cowen and Company.

Q1 Q22009

Q3Q1 Q22007

Q3 Q4 Q1 Q22008

Q3 Q4

0.0%

(5.0)

(10.0)

(15.0)

(2.7)% (3.7)%(7.9)% (6.6)%

(10.5)% (10.9)% (10.4)%(11.3)%(9.0)%

(13.3)%

(7.0)%

Source: ECM Analytics and FactSet as of September 25, 2009. Courtesy of Cowen and Company.

Mar 2003

Jul 2004

Oct 2005

Feb 2007

Jun 2008

Sep 2009

20

40

60

80

100

120

140

160

180

200

0

10

20

30

40

50

60

70

80

90

VIX

VIX Close as of September 24, 2009: 25.0

Quarterly FOs Priced

Source: ECM analytics. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings, and offerings less than $10 million. Proceeds include overallotment amount.Gray shading represents Visa’s $19.7 billion IPO on March 18, 2008.(a) As of September 25, 2009.Courtesy of Cowen and Company.

FOLLOW-ON

CONVERTIBLE

IPO

VISA IPO

(US$

in b

illio

ns)

$120

110

100 90 80 70 60 50 40 30 20 10

0

$15.4$8.0 6.4

$15.5 $6.3 $8.3

$45.1$17.9

$8.5

$27.5

$12.8$8.0

$21.2

$23.5

$10.9

$2.7$8.4

4.7

$29.8

$31.5

$19.2

$23.3

$27.1

$8.3

$34.3

$30.6

$11.3

$8.3

$10.

6

$10.

6$2

9.1

$28.

3

$13.

1

$0.8

$19.

7

$10.

7

$23.

3

$3.7

$64.

0

$32.

2

$0.9

$34.

55.

3

$78.

5

$0.8

$1.2$0.1 $8

.05.

2

$102

.7

$15.

3

$1.4

$41.

7

$7.6

$3.9

1 4 M O F O T E C H f a l l / w i n t e r 2 0 0 9 w w w . M O f O . C O M / M O f O t e C H

Faced with skittish markets and aggressive shorting activity, companies are turning to innovative approaches to financing.

Traditionally, companies that wanted to raise capital would follow a basic formula: Announce a follow-on offering of securities, work through a marketing period for a few days, and then execute the transaction. But evolving market realities have made that meth-od challenging, prompting companies to look for more innovative

approaches. The first factor is unprecedented market volatility. Today, stock prices and trading volume are often erratic, mak-ing it harder for companies to plan or time offerings. The second factor is the growing presence of hedge funds. “Often, when a deal is announced, market participants short the issuer’s stock, which typically pushes down the stock price by the time the transaction is priced,” says Anna Pinedo, a partner at Morrison & Foerster.

Scaling the WallsNew market realities have pushed companies to turn to “wall-crossed” and “pre-marketed” deals

[ DATAGRAM ] By Peter Haapaniemi Charts by Alex Reardon

… and so do deteriorating pricing conditionsIt is increasingly common to see an issuer’s stock price decline after the company announces a public offering (see chart below). Indeed, studies have shown that today, such an announcement typically results in significant shorting activity in the offered stock. This activity can, in itself, be enough to put downward pressure on the stock price. To avoid that pressure, more and more issuers are looking to hybrid offerings that combine private and public offering methodologies, including wall-crossed deals.

Volatility makes it tough to raise capital…When the market is volatile, companies look-ing to raise capital tend to stay away, and the volume of follow-on stock offerings drops (see chart at right). The market has experi-enced extreme volatility recently, as shown by the elevated CBOE Volatility Index. In this environment, companies that need to fi-nance are more reluctant than ever to rely on traditional, fully marketed offerings, because such offerings subject their stock to these market vagaries during the public marketing period. As a result, financing techniques that minimize exposure to sudden swings have become particularly important.

AverAge File-to-oFFer Follow-on Discounts

cBoe volAtility inDex (vix) vs. QuArterly Follow-on (Fo) volume


Q1 Q22009

Q3Q1 Q22007

Q3 Q4 Q1 Q22008

Q3 Q4

0.0%

(5.0)

(10.0)

(15.0)

(2.7)% (3.7)%(7.9)% (6.6)%

(10.5)% (10.9)% (10.4)%(11.3)%(9.0)%

(13.3)%

(7.0)%


Mar 2003

Jul 2004

Oct 2005

Feb 2007

Jun 2008

Sep 2009

20

40

60

80

100

120

140

160

180

200

0

10

20

30

40

50

60

70

80

90

VIX




FOLLOW-ON

CONVERTIBLE

IPO

VISA IPO

(US$

in b

illio

ns)

$120

110

100 90 80 70 60 50 40 30 20 10

0

$15.4$8.0 6.4

$15.5 $6.3 $8.3

$45.1$17.9

$8.5

$27.5

$12.8$8.0

$21.2

$23.5

$10.9

$2.7$8.4

4.7

$29.8

$31.5

$19.2

$23.3

$27.1

$8.3

$34.3

$30.6

$11.3

$8.3

$10.

6

$10.

6$2

9.1

$28.

3

$13.

1

$0.8

$19.

7

$10.

7

$23.

3

$3.7

$64.

0

$32.

2

$0.9

$34.

55.

3

$78.

5

$0.8

$1.2$0.1 $8

.05.

2

$102

.7

$15.

3

$1.4

$41.

7

$7.6

$3.9

f a l l / w i n t e r 2 0 0 9 M O F O T E C H 1 5

In response, many companies are turning to “wall-crossed” or “pre-marketed” deals. Rather than announce an offering, the company discusses a potential financing with a select number of institutional investors on a confidential basis, which means the in-vestors are precluded from trading and shorting the stock. “Once the underwriters have indications of interest for a deal, they make an announcement to the public to fill out the deal—but usually just for a limited period,” says Pinedo.

That approach combines the broader reach of an underwritten public offering with the limited market exposure of a private deal. “You get the best of the best of both worlds,” says Grant Miller, managing director in the Capital Markets Group at Cowen and Company, an investment firm in New

York. “You privately build a book of demand, and then you reach out publicly to more investors in order increase the size or price of the deal—while staying away from market risk.”

In the past, many observers looked down on such innovative approaches. But because they address evolving market challenges, says Pinedo, “wall-crossed deals are becoming well-established and are likely here to stay.” M

The result: More “nontraditional” follow-on offeringsIncreased volatility and pre-pricing shorting activity have made raising capital more challenging. As the chart shows, this has contributed to a decline in IPOs and convertible offerings and created a shift in the use of equity and equity-linked financing, with follow-on offerings playing a larger role. To some extent, spikes in recent follow-on activity have been driven by troubled financial institutions looking for infusions of capital. But among medium-sized growth companies, there is a growing reliance on “nontraditional” methods, such as follow-on wall-crossed offerings. These methods abbreviate the “public” marketing period or target marketing efforts to a relatively narrow group, helping to insulate the offering from shorting-driven downward pressure and overall market volatility.


Q1 Q22009

Q3Q1 Q22007

Q3 Q4 Q1 Q22008

Q3 Q4

0.0%

(5.0)

(10.0)

(15.0)

(2.7)% (3.7)%

(7.9)% (6.6)%(10.5)% (10.9)%

(10.4)%

(11.3)%(9.0)%(13.3)%(7.0)%


Mar 2003

Jul 2004

Oct 2005

Feb 2007

Jun 2008

Sep 2009

20

40

60

80

100

120

140

160

180

200

0

10

20

30

40

50

60

70

80

90


VIX



FOLLOW-ON

CONVERTIBLE

IPO

VISA IPO

(US$

in b

illio

ns)

$120

110

100 90 80 70 60 50 40 30 20 10

0

$15.4$8.0 6.4

$15.5 $6.3 $8.3

$45.1$17.9

$8.5

$27.5

$12.8$8.0

$21.2

$23.5

$10.9

$2.7$8.4

4.7

$29.8

$31.5

$19.2

$23.3

$27.1

$8.3

$34.3

$30.6

$11.3

$8.3

$10.

6

$10.

6$2

9.1

$28.

3

$13.

1

$0.8

$19.

7

$10.

7

$23.

3

$3.7

$64.

0

$32.

2

$0.9

$34.

55.

3

$78.

5

$0.8

$1.2$0.1 $8

.05.

2

$102

.7

$15.

3

$1.4

$41.

7

$7.6

$3.9

u.s. ipo, Follow-on, AnD convertiBle volumes


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Imagine, if you will, this warning on a future bottle of your favorite over-the-counter headache medication:

“Warning: Taking this drug may cause the following side effects: ir-ritability or euphoria; loss of vision or hearing; epileptic seizures; sui-cidal tendencies; the increased risk of sterilization or multiple births.”

Far-fetched? Perhaps. But it may be the logical extension of a new policy in product liability cases. The policy arose from a pharma-ceutical case, but companies in other highly regulated industries—such as medical devices and airlines—may find themselves stuck in a similar situation when the federal government mandates one

thing and a jury another.The Food and Drug Administra-

tion decides whether the benefits of a drug outweigh the risks and approves drug labeling. When drug companies are sued over labeling in state court, their defense historically has been that federal law trumps inconsistent or contradictory state law—a con-cept known as preemption.

Recently, a professional musi-cian named Diana Levine sued drugmaker Wyeth after receiving an improper IV push injection of the company’s anti-nausea drug Phenergan to treat a migraine. Levine developed gangrene and her right arm was amputated.

Levine claimed the warning label

REBOOT

on the drug—which carries the risk of gangrene when injected intravenous-ly—should have explicitly prohibited IV push injection. Wyeth argued in Vermont Superior Court that the FDA, by approving Phenergan and its labeling, was the ultimate authority regarding the adequacy of a prescrip-tion drug label, not the state. The jury awarded $7 million to Levine, but Wyeth appealed to the U.S. Supreme Court. This past March, the Supreme Court ruled that federal law does not preempt the state law, and that a com-pany—not the FDA—bears primary responsibility for drug labeling.

“It’s Orwellian,” says Morrison & Foerster partner Jim Huston, who specializes in product liability matters. “The FDA says that a drug company cannot change its label-ing. So what happens when the company gets sued for inadequate labeling? This decision essentially exposes drug companies to liabili-ties for failing to do something that the FDA says they cannot do.”

The end result, Huston says, could be meaningless over-warnings as described on the fictional head-ache remedy, above, as companies fear that the FDA-mandated warn-ing may not satisfy every potential litigant. The ruling also makes plan-ning a litigation strategy extremely difficult, Huston says, because it is now unclear when preemption will succeed and when it won’t.

The Levine decision could result in a surge in products liability liti-gation in state court, Huston says, which in turn may have a dampen-ing effect on product research and development. Until the judges or lawmakers clarify for companies how they can safely steer clear of liability problems, executives and counsel can at least keep track of the case law for clues as to the likelihood of preemption. M >>

MOFO TEch is a custom publication produced for Morrison & Foerster LLP by Leverage Media LLC, Dobbs Ferry, NY. Editorial Director: Michael Winkleman // Editor: Richard Sine //Art Director: James Van Fleteren // Production Director: Rosemary P. Sullivan Copy Editor: Sue Khodarahmi // Cover Illustration: Kurt Ketchum // Morrison & Foerster Marketing Managers: Dave Harvey, Michael Zwerin ©2009 by Morrison & Foerster LLP. All Rights Reserved. Morrison & Foerster and MoFo Tech are trademarks of Morrison & Foerster LLP. Leverage Media LLC is a member of the Custom Publishing Council.

sCoTT MATTHEw

s FOR

MO

FO TECH

Preempting Preemption

By Donna Cornachio

A supreme Court ruling on liability leaves companies in the lurch

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me develop an IP strategy for my early stage company? Who can understand my technology and business challenges? How much should I invest in building

a patent portfolio? Do I build or outsource an IP department? How much should I invest in patent prosecution? How can I accelerate and mine our innovation efforts? How can I reduce my patent litigation costs? What is the value of a set of IP assets? How do I manage my portfolio

companies' IP assets? How do I raise capital for IP development? Who can I trust to help me develop an IP strategy for my early stage company? Who can

understand my technology and business challenges? What is the value of a set of IP assets? How much should I invest in building a patent portfolio? Do I build or outsource an IP department? How much should I invest in patent prosecution? How can I accelerate and

mine our innovation efforts? How do I manage IP risk? How can I reduce my patent litigation costs? How do I manage my portfolio

companies' IP assets? How do I manage IP risk? How do I

raise capital for IP development? Who can I trust to help me develop an I P

strategy for my early stage company? How much should I invest in building

a patent portfolio? Do I build or outsource an IP department? How much should I invest in patent prosecution? How can I accelerate and

mine our innovation efforts? Who can understand my technology and business challenges? How do I manage IP risk? How can I reduce my patent litigation costs? What is the value of a set of IP assets? How do I manage my portfolio companies' IP assets?

How do I raise capital for IP development? Who can understand my technology and business challenges? How much should I invest in building

a patent portfolio? Do I build or outsource an IP department? How much should I invest in patent prosecution? How can I accelerate and

mine our innovation efforts? How do I manage IP risk? Do I license, acquire, or build? What is the value of a set of IP assets? How

do I manage my portfolio companies' IP assets?

How do I raise capital for IP development? Who

can I trust to help me develop an IP strategy

for my early stage company? Who can understand my technology and business challenges? How much should I invest in building

a patent portfolio? How much should I invest in patent prosecution? How can I accelerate and

mine our innovation efforts? How do I manage IP risk? How can I reduce my patent litigation costs? What is the value of a set of IP assets? How do

I manage my portfolio companies' IP assets? How do I raise capital for IP development? Who can I trust to help me develop an IP strategy for my early stage company? Who can understand my technology and business challenges? How much should I invest in building

a patent portfolio? Do I build or outsource an IP department? How much should I invest in patent prosecution? How can I accelerate and mine our innovation efforts? How do I manage IP risk? How can I reduce my patent litigation costs? What is the value of a set of IP assets?

How do I manage my portfolio companies' IP assets? How do I raise capital for IP development? Who can I trust to help me develop an

IP strategy for my early stage company? Who can understand m y

technology and business challenges? How much should I invest in building

a patent portfolio? What is the value of a

set of IP assets? How do I raise capital for IP development? Who can I trust to help me develop an IP strategy for my

early stage company? Who can understand my technology and business challenges? How much should I invest in building

a patent portfolio? How do I manage my portfolio companies' IP assets? How can I reduce my patent litigation cases? What is the value of a set of IP assets? How do I manage my portfolio companies' IP assets? How do I raise capital for IP development? Who can I trust to help

We've got answers. Working together, Morrison & Foerster and the Ovidian Group, harness broad ranging technology, legal, and business expertise to successfully answer any IP question. Our unique collaboration combines Morrison & Foerster's renowned legal knowledge with Ovidian’s specialized IP business, investment and innovation experience to enable you to evaluate, manage, and monetize your intellectual assets.

For more information, please contact Laurie Hane at Morrison & Foerster at 415.268.7092 or Joe Siino at Ovidian at 415.632.9077. Or, visit us on the web at www.mofo.com or www.ovidian.com.

©2009 Morrison & Foerster LLP | www.mofo.com

How much should I invest in building a patent portfolio?

How can I accelerate and mine our innovation efforts?

Who can I trust to help me develop an IP strategy for my early stage company?

How can I reduce my patent litigation costs?

©2009 Morrison & Foerster LLP | www.mofo.com

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