Editors' Blog

A&O’s RIM costs – the bottom line is still the bottom line

Posted 18/04/2008 by Alex Novarese

It has been a long time since a major UK law firm was on the receiving end of the kind of drubbing that Mr Justice Floyd yesterday (17 April) visited on Allen & Overy (A&O).

Assessing costs on A&O’s largely successful representation of BlackBerry manufacturer Research in Motion (RIM) in a High Court patent dispute with Visto Corporation, the judge starts by pouring scorn on the “astonishing” £5.18m sum A&O clocked up. Then Floyd keeps going, outlining the firm’s costs and resourcing in withering detail.

Indeed, this assessment could end up being a model for litigators looking for a yardstick for costs and manning on High Court litigation. Over 15 months, two senior associates respectively spent 2,252 and 2,291 hours, between them accounting for costs of nearly £2m, sums for which Floyd observed “one would be entitled to expect each of them to be able to recite all the documents in the case by heart”.

A&O’s sole assigned partner, Nicola Dagg, put in 1,387 hours, while the other four associates on the case spent around 3,500 hours. And Floyd continues: “Perhaps most surprising of all is that another £1m odd has gone on trainees and paralegals,” for what he says were largely superfluous prior art searches that consumed 5,000 hours.

He continues: “If one adds up all the hours spent by RIM solicitors, one finds that some nine man years have been spent over 15 months. All for a trial with no disclosure which lasted about five days.”

In comparison, Visto’s costs, despite instructing a top-flight IP firm in the form of Taylor Wessing and experienced specialist counsel, were a far more modest £1.6m, fees which Floyd notes were enough to mount a case that was “thoroughly and conscientiously prepared”.

It then goes on and on but the most quotable bit is probably this: “The picture summoned up by this bill of costs is one which is totally unfamiliar to anyone who has been involved in economically conducted patent litigation.”

Floyd also has “great difficulty with the logic” of Dagg’s assertion that the defence was part of a wider international tussle between Visto and RIM and that Visto’s “overall goal was to shut down RIM’s BlackBerry system entirely”.

It seems pretty damning and, by consensus of rival patent litigators, it has not been the best advert for A&O in particular or magic circle firms as cost-effective options in patent disputes. The criticism is also going to sting in legal circles, coming from a judge with a strong record in IP litigation.

But it’s worth keeping a little perspective, especially as this kind of litigation really does exist in a global context. While it is agreed that this was not the most complex dispute, it comes against a backdrop of high-pressure IP litigation, for which RIM has often been a prime target thanks to the market domination of the BlackBerry.

And Visto - a California software company that produces wireless email software for mobile phone manufacturers - is no stranger to proactive litigation, having in recent years pursued a strategy of robust patent enforcement.

In that context, aggressive defence has a broader tactical value than the case in itself. If you want to win the war, you have to show that you’re ready to put up a fight, even if the individual battle doesn’t appear that important. And anyone who doubts the stakes or potential costs of this litigation needs only glance at the bloodbath around Qualcomm, or indeed the $612m settlement RIM agreed in 2006 with NTP following an IP dispute. Likewise, A&O’s costs, which are undeniably high by UK standards, would be small change compared to the kind of fees sloshing around US patent hot-spots like Texas.

As such, A&O’s assertion that it was representing its client in a high stakes matter - and let’s not forget that the battle-hardened RIM is apparently happy with its adviser - should not be easily dismissed.

Latham & Watkins IP veteran Larry Cohen sums it up pretty well: “This does seem like a lot of money for this kind of a patent case. However, no-one can question the result of the work of the Allen & Overy team, who achieved the right outcome for their client.”

In IP litigation, the result is pretty much the bottom line. Still, they might want to keep a slightly closer eye on the costs next time.

alex.novarese@legalweek.com; claire.ruckin@legalweek.com