Industry Watch

Eastern promise

David Moran of the Minneapolis law firm Winthrop & Weinstine talks about his firm’s unexpected foray into China

For the past 30 years or so, David Moran has been assisting small and midsize Minnesota companies. A shareholder in the Minneapolis law firm Winthrop & Weinstine, he's helped his clients with mergers, acquisitions, real estate, and the like. Few would have foreseen Moran and his firm also getting involved in China, but lately that's been happening. We asked Moran to tell us more about it, as well as his increased focus on intellectual property rights.

What are some of the issues with intellectual property that you're seeing today?

If a business has intellectual property  whether it's a trademark, a trade name, a patent, or a trade secret  it seems more important than ever to do whatever you can to protect it. When you sell businesses, the companies that receive a huge multiple ... are those that have their IP really well protected.

That gives them a big edge in the marketplace. We've been doing a lot of patent work recently for companies in China that sell products in the U.S. without patenting them here first  and they get knocked off in the U.S. It's just the opposite of the old days, when people would outsource their manufacturing to China and get knocked off over there.

You can't trust those Americans!

Actually, I had my client say that to me, and I said, "You could have used another law firm when you first came over here." It was kind of a horror story. He explained things to us, and I said, "We're in the upper Midwest. We're just honest, hard-working people up here. You can trust us." He went to the translator, and they came back, "That's what the last American said!"

You can patent something in the U.S., and it doesn't protect you in China  and vice versa. We were fortunate to hire six people from Dorsey & Whitney's patent [practice] last January, and it has been a huge benefit to us.

In terms of the Chinese companies coming here, when did that start to become a significant source of business for you?

The Dorsey folks had some Chinese business, and I had a client, a U.S. company that was acquired by their company in China that manufactured their products for them  and now we're doing work for the Chinese company here. It has been steadily increasing, and I think there's a lot of opportunity there.

We're trying to figure out how to capitalize on that because if U.S. companies look at outsourcing and manufacturing to China, and they're concerned about somebody ripping off their IP over there, people in China are just as uncertain about how to do business in the United States. We think of our legal system as solid and well established. They are concerned about, "How do I do business over there so I don't get ripped off?" Very similar.

How many foreign clients do you have?

I think it's steadily increasing. Expanding our IP practice has really helped that. You talk to so many businesses that either sell into China or have their products manufactured in China ... there's a big consumer market over there, and it's going to get a lot bigger.

Are you able to say who this Chinese client is? Or can you tell us what they do?

I can tell you that they're in Shenzhen and they're in technology and electronics.

So your Chinese client is like your foot in the door in China.

That's exactly right. We have a summer associate from the U of M law school that's going to work for us this summer who's Chinese. There are a number of significant cultural differences, but when it comes to something like hiring an attorney in the U.S., she said it's absolutely word-of-mouth. Yes, it's very important to us, and the client has been great about it.

The other thing that happened was that having the IP folks come over from Dorsey was just perfect timing. Our client in China owns over 250 patents over there, and he had none in the U.S. We told him when we went over there last April, "Here's what's going to happen, you're going to get knocked off." Then it happened. Now all of a sudden, he understands.

With the summer associate, did the fact that she's Chinese play a role in her hire?

Yes, the language barrier is huge. Mandarin is not a language you can look at and kind of figure out ... Probably we'll use her as a coach. I'm pretty good at just saying and doing the wrong things, so I need all the help I can get.

I think in the Midwest we might share things that they wouldn't necessarily see a reason to share.

Our translator (who was born in China and grew up in the U.S.) on occasion will say to me, "I am not going to translate that the way you said it because I understand why you said it. It's perfectly reasonable here, but if I said that, it would just send him right through the roof." Then I asked him, "Does he ever say things that if you said to me would send me right through the roof?"

He says, "All the time."

There's an art to translating.