The Complete Lawyer

“The Client,” is a new feature of The Complete Lawyer. We bring you candid, thought-provoking interviews with the world’s leading corporate counsel conducted by long-time TCL contributor, Marcie Shunk of BTI Consulting. BTI’s senior researchers conduct thousands of interviews each year with corporate counsel, delving into the nuances of client satisfaction, probing for new, undefined issues and delineating drivers behind key market trends.

This month, we are delighted to feature Jaimes Sher, Chief Intellectual Property Officer of Chemtura Corporation.

MS: Good morning, Jaimes. We are very happy to have you join our discussion today.

JS: Thank you very much.

MS: We will be talking about the state of the economy and how the new administration will affect your area of expertise, Intellectual Property. Could you please describe your role and key responsibilities at Chemtura?

JS: I am the Chief Intellectual Property Counsel for Chemtura Corporation and I handle and manage all Intellectual Property matters for the company worldwide.

MS: What are your top goals and priorities for 2009?

JS: We’re going to continue with our process improvements in terms of managing our IP better and more smartly for each of our businesses; and in addition, implementing various cost control measures, which I’m sure many corporations around the world are putting in place, with respect to controlling how we spend money, what we spend money on, and outside counsel consolidation.

MS: Recently we’ve seen many news stories focusing on the state of the economy and how the bailout bill and the new administration are going to impact companies. What impact do you think the economic downturn will have on your company, particularly your legal strategy for 2009?

JS: I think 2009 is going to be difficult and challenging particularly because I believe that with most companies, budgets are going to be substantially less than previous years and our businesses are going to expect the same services. As a result, companies are going to have to be much smarter at how they manage and use their limited budgets in terms of maintenance fees, filing of new patents and trademarks, and use of outside counsel. It’s quite possible that companies could resort to hiring in-house lawyers versus sending work outside. That’s always a good way to reduce costs and improve efficiencies. I can see this happening not only in the IP arena, but in the general legal arena as well. It’s hard to judge because at the same time companies are cutting employees, so of this I’m not quite certain.

MS: Do you see more companies aggressively protecting their IP assets or has this become a secondary priority?

JS: I don’t think that it’s become a secondary priority for the IP function or the technology organization, but for our businesses it is probably true. These days, businesses are more interested in trying to sell whatever it is they’re selling and generate revenue for the corporation. The technology folks we work with pretty much continue to do what they’ve been doing, although they’ve been hamstrung to some extent because their budgets are being cut as well. They are also losing people so everybody is feeling the crunch.

MS: Is there any direct impact on IP filings with the economic downturn?

JS: I believe that IP filings are going to be reduced—not substantially, but they will go down, primarily because there’s less R&D activity and as a result less new product being developed. It’s not just patents that will be affected; there will also be fewer marketing initiatives: the trademark world will see a diminishing number of trademark applications that will be filed over the next few years as well.

MS: How do you think the financial challenges might impact Chemtura’s legal issues in the future?

JS: All the writing on the wall suggests that in two years things will be substantially better than they are today, but not as good as they were a few years ago. As a result, I don’t think you’re going to see too many changes in two years as compared to what you’ve seen over the last several years. During this two-year gap, companies are going to look more carefully at what they spend on IP and the value of the IP function and technology organizations—what assets they are bringing to the corporation. Much of this will depend on the technology that’s involved, and the type of company, whether chemical, biotech or software.

MS: Then we’ll see a more conservative approach for a while.

JS: I think that’s a fair statement. I believe approaches are going to be a lot more conservative. Rather than filing several patents on a particular product, maybe only one gets filed. Rather than putting off decisions to hold onto intellectual property in the hopes of either developing the technology further or licensing the technology in the future, business today might decide in today’s economic climate that it’s not worth waiting, and abandon the assets earlier in their lifecycle. It’s hard to say. It’s also business dependent and has competitive implications that must be considered.

MS: I think everyone is feeling their way.

JS: That’s correct. Legal functions within corporations are functional and some corporations look at ways to reduce costs. The way to reduce costs such as overhead is to reduce the sizes of their functional organizations. As a result, less work gets done on the inside by these functions, one of them being the intellectual property group. Many business executives often view Intellectual Property as an expense. If you’re the CFO and you’re looking at the balance sheet and you see that you’re spending x number of dollars on Intellectual Property, the first question you should ask is, “What are we getting for that?” In some companies, it’s very hard to put a value on it. It’s not that easy to say, “How much is this patent worth?” or “How much is this trademark worth?” Some companies can do that. When you’re talking about a company such as ours with several thousand products and many different processess. it’s hard to say which patent or trademark is worth more than any other

MS: With regards to the new administration. Is there any particular impact you see on your legal department and your IP policies?

JS: From the standpoint of IP, I don’t see much that is going to be changed over the next several years. Congress has a lot bigger fish to fry, many more economic issues to deal with, than worrying about various nuances with respect to some of the changes that have been taking place in IP. I think there will be some important changes that need to be made, but I’m not sure they will be properly vetted. It’s going to take some time to put together a new workable system. Pendancy in the patent offices has gone up. Maybe they need to hire more examiners or raise fees when looking at all this rather than taking away basic patent practice processes that have been around for decades. People aren’t getting their intellectual property as soon as they would like to have it. That affects people’s strategy with respect to whether they file for patent protection or not. It’s more applicable to patents than it is to trademarks, but if it takes five years to get a patent and the product lifespan is only a few years, maybe it’s better to rely on trade secret protection than it is to try to seek patent protection.