Matthew Powers' decision to leave Weil, Gotshal & Manges LLP and start his own law firm has been the talk of the Silicon Valley bar for the last month. Powers is one of the country's leading patent trial lawyers and co-headed Weil's litigation department, so he certainly has the reputation and management experience to be successful in his new venture. His rivals' surprise and, in some cases, dismay stems from the belief that the move will allow Powers to take on more work for so-called nonpracticing entities or trolls, companies that seek to license their patents or sue alleged infringers instead of trying to develop their technology commercially.

Many in the Valley view trolls as parasites that take advantage of flaws in the patent system, and for them Powers' move is almost a betrayal, as if a major litigator at Cravath, Swaine & Moore LLP or Wachtell, Lipton, Rosen & Katz had left to represent shareholders in securities litigation.

Powers has been quiet since announcing his departure from Weil in late June, so divining the direction his new enterprise, Tensegrity Law Group LLP, requires some speculation. But the current state of patent litigation and the path that two new patent law firms have taken suggest Powers won't become a modern-day Jerome Lemelson, the most infamous of the patent trolls. Instead, his decision reflects an increasingly complex patent environment in the U.S.

Some Valley lawyers hypothesize that Powers will form an investment vehicle to acquire and then enforce patents currently held by Intellectual Ventures Management LLC, the nonpracticing entities that former Microsoft Corp. chief technology officer Nathan Myhrvold started in 2000 as a patent aggregator and think tank. IV is sufficiently controversial in the Valley that Wilson, Sonsini, Goodrich & Rosati PC decided years ago not to handle its work for fear of alienating current clients, and after a decade of trying to generate revenue by licensing its technology, IV filed its first patent suits last December. Weil's Jared Bobrow, who now chairs the firm's patent litigation practice, is representing IV on one of the suits, but lead counsel on the other two come from Susman Godfrey LLP, a litigation boutique, and Desmarais LLP, which focuses on patent practice and may be one of the models for Powers' new effort.

The team that Powers built at Weil has represented many of the world's largest technology companies, including Apple Inc., Cisco Systems Inc., Microsoft, Oracle Corp. and Samsung Group, and has also helped generate important corporate assignments for the firm, whose partner Kyle Krpata recently advised Apple on its successful joint bid for the patents of Nortel Networks Inc. (see Deal diary, page 16) and has done work for Intel Corp., Getty Images Inc. and Texas Instruments Inc., among others. Weil may be less apt to land such assignments if it represents IV in litigation.

Powers won't have such problems as the head of a small firm, where other potential client conflicts will be easier to manage. John Desmarais, who left Kirkland & Ellis LLP two years ago to form the New York boutique that bears his name, also created Round Rock Research LLC to acquire 4,200 patents from Micron Technology Inc. and maximize their value either through licensing or litigation.

Desmarais couldn't have done that had he stayed at Kirkland. And as The American Lawyer detailed in an April profile of Desmarais, he's continued to do work for five companies: Cisco, Micron, Boston Scientific Corp., GlaxoSmithKline plc and IBM Corp.

Such assignments remain attractive for several reasons. First, recent patent law jurisprudence, including key decisions from the U.S. Supreme Court, has weakened the hand nonpracticing entities have to play in bringing patent infringement suits. That, in turn, means that companies are more likely to see such cases as a problem to be managed rather than a potentially dire threat that must be averted at all costs.

Meanwhile, the battle among large tech companies for smartphone supremacy that drove the Nortel auction is also likely to lead to litigation in which they will expend significant resources, assignments for which Powers should still be able to compete successfully.

The Nortel auction also shows the opportunities for firms such as Desmarais and Tensegrity in valuing patents, which are notoriously resistant to standard financial models. Nortel used Lazard for banking advice on the sale of many of its assets, but for the patents, the Canadian telecommunications company tapped Global IP Law Group LLC, which was formed by a small group of lawyers two years ago. A more liquid market in patents fostered in part by the growth of IV and similar companies could provide analogous opportunities for Powers and Desmarais.

See the complete archives of Safe Harbor

David Marcus is senior writer at Corporate Control Alert.