Fear of flying and recession jitters are pockets of turbulence in the otherwise high-flying, globe-hopping practices of San Diego lawyers involved in international trade, although there wasn’t much of a New World Order in the legal global village pre- Sept. 11. Norwegians don’t like our trial discovery process; Asians don’t like our written contracts.

But in tough times, companies use intellectual property claims to wage war, and what’s bad for business in general is good for litigators.

“Litigation is countercyclical and acyclical,” explains Craig Celniker, a specialist in international arbitration and intellectual property cases at Morrison & Foerster. “Our San Diego office is at 115 percent of budget for the year. When the pie is shrinking, that’s when they tend to fight over the pieces.” Celniker and his firm represent international communications players such as satellite television’s Echostar and locally, dot-com survivor WebSideStory.

The Columbia grad says the most common international trade suits involve contract provisions relating to money and scheduling of payments. For example, he notes, “Asian business people have a very strong sense of what we agreed to is what we agreed to verbally. Conflicts arise when the written version conflicts with their expectations.”

Before disputes arise, international traders are advised to arm themselves with an arbitration clause that specifies whose rules will govern an arbitration (American Arbitration Association, International Chamber of Commerce, the United Nations) should trouble arise. “Companies are very wary about resolving differences in home courts so they go for arbitration,” Celniker says. “Post dispute, they’re less likely to go to arbitration because their defenses are already up.”

In the global village, a Morrison attorney might visit Paris, Brussels, Spain and London in a week and a half. If terrorism is putting the brakes on business jets, Celniker says it’s short-term. “I think everyone’s gotten over it,” he says. “At first, there was a lot of interoffice talk about how we had to put our heads down (and get back to business) or else the terrorists win.”

Unlike most legal practice, international trade doesn’t break down into a plaintiff’s and defendant’s bar (or practice), says Fred Berretta, a patent and intellectual property specialist at Knobbe, Martens, Olson & Bear. “In IP, you can work both sides of the V.” The firm represents Callaway Golf, Oakley (sportswear), and Carl’s Jr., currently being sued by TGIFriday’s for unfair competition in making fun of Friday’s servers in that “$6 burger” ad.

Berretta agrees with Celniker that litigation becomes a business tool in a downturn. “When things get tighter, competitors become intense,” Berretta says. “They’re looking more closely at what their competitors are doing and how to stop them.”

A 2001 survey of the American Intellectual Property Association shows that the median cost of a patent litigation trial where more than $25 million is at stake is about $4.5 million, but that includes fees and witnesses.

Despite the high stakes, Berretta says, “Less of these cases are being settled, and more are going to trial. I’m not sure why that is; there’s still a lot of uncertainty in the law created by the courts in the Appellate Circuit Court in D.C. about how patents are construed. So it’s harder for people to reach a settlement because no one knows what’s going to happen and each side thinks it can win.”

A common misunderstanding about patents, Berretta explains, is that they protect you from getting sued. “A patent is an offensive weapon,” he says. “A patent doesn’t protect from being sued for patent infringement. For small companies, getting a patent is the only way to survive, to exclude others from making their product. That’s the name of the game.”

Patent law used to be one of those electives law students would choose to pass on, but Berretta says technology is so important that students now are directing their courses with an eye to a patent specialty. “There are not a lot of patent cases on Court TV,” Berretta says. “But it’s gotten sexier because the whole idea of technology has gotten more interesting because it’s so important. Obtaining that patent and protecting it are key to the small companies’ survival.”

For others in the international arena, advising clients how not to get sued saves litigation expenses later on, says Mike Perez, a partner at Luce, Forward, Hamilton & Scripps. Perez works with multinational companies like Coca Cola on “best practices” designed to reduce the number of potentially expensive suits filed by employees, especially minorities.

Perez says he sees two trends in his international labor practice. “You can accommodate the diverse workforce and still be economically productive,” he says. “If minorities don’t think they’re being given a fair shake at top jobs, more suits will be brought by supervisory management.”

He expects an increase in suits and threats of suits over discrimination based on religion and national origin since 9/11.

In addition to fine-tuning internal employment practices, Perez counsels clients such as Princess Cruises and Carnival Cruises in cases involving conduct. “What happens when your U.S. employee does something or has something done to them in Latin America?” he asks. As a representative for corporate clients, “We would prefer that suits go forward in the foreign jurisdiction. A harassment suit is handled very differently in a foreign country than in the U.S., for example.”

As a public service, Perez suggests three ways for companies with international workforces to stay out of court.

• Set up best practices, especially in evaluation and appraisal of employees.
  
  
• In the claim of a wrongful act against a business, hire a good outside investigator. Better to go outside the company to investigate. (Lawyers, human resources consultants and private investigators can do this.)
  
  
• Be sensitive to diversity issues.

While some firms employ workers overseas, others needing to import workers might find themselves in Gary Perl’s office. Perl, managing partner at HinsonWexlerPerl, concentrates on obtaining work visas and other business immigration work for pharmaceutical, biotech, high-tech and manufacturing clients.

“Since we’re dealing by and large with business issues, 9/11 hasn’t affected our business, and procedures we follow are the same, with the exception of engineers coming from a certain class of countries,” he says.

Seeking to dispel the notion that laid off foreign workers with time on their hands are staying past their visas, Perl says he hasn’t lost faith in the Immigration and Naturalization Service to track people in the United States on work visas. Depending on their area of expertise, foreign workers have only a certain amount of time to find a new job, or they must leave the country.

Whither the global village?

“In the short term, there’ll be the human nature to react against globalization and people reluctant to get on planes,” Perl says, “but that’s offset by the drive of people to get ahead. Terrorism won’t prevent globalization because U.S. companies already have subsidiaries overseas, or U.S. companies are owned by overseas firms and companies are already doing business in those markets.”

That view is shared by Clark Libenson, partner in international securities at Baker & McKenzie. Unlike Beretta, Libenson isn’t trying to sue for competitive advantage. He’s a dealmaker. “I’m at the front end of the process,” he says. “Certainly, our business is not recession proof, but to the extent that companies have business relationships outside the United States, those relationships will continue.”

Citing a trend unrelated to 9/11 but central to the border’s development, Libenson says higher tariffs are being phased in for the import of specialized components from non-NAFTA countries like Japan and South Korea. “Right now, the issue is below the radar screen, but the higher duties could cause those non-NAFTA countries to revisit their manufacturing.”

Libenson recommends steps to keep an international deal from heading south:

• Understand cultural differences and business practices.
  
  
• Understand tax and regulatory environments under which you and your partners are operating.
  
  
• Don’t neglect having the dispute resolution mechanism called for in the contract. “You might have some form of international arbitration that enables you to have a more efficient resolution,” he says.

While Libenson and Perl are in the majority opinion on the durability of international trade in tough times, a dissenting opinion is offered by Manuel Pasero, managing partner of a five-attorney firm in Tijuana. “2001 has been a very low year,” he says. “When you in the United States get a cold, as they say, we get pneumonia.” Pasero has represented Tyco and Louisiana Pacific (a lumber company) and his firm handles real estate, labor, environmental and immigration issues.

Now, he says he hopes Toyota will locate a plant along the border (a decision was in the works in December), although he agrees with Libenson that some countries are suffering negative consequences.

Pasero says post Sept. 11, “some business people in the states have become frozen. Terror is not the killer, that’s temporary.”

In a lingering recession, Pasero predicts that many U.S.-based small and mid-sized firms are “not going to survive unless they move fast to cut costs.”

Pasero says Mexican President Vicente Fox is doing a good job in unfavorable circumstances. “There’s a press campaign against him in Mexico. The recession is not helping either.

We are in the process of going to a transition from the third world. And there are still very strong opposition parties that want to make his life miserable”— more miserable, at least, than George Gonzalez, who despite it all says that 2001 was shaping up as the “best of my career.”

A partner in Gordon & Rees’ San Diego office, Gonzalez was once senior staff attorney at Solar Turbines Inc., a subsidiary of Caterpillar Inc.

“Many cases arose over disputes in contracts after NAFTA went into effect because of cultural differences, jurisdiction over parties, (and the fact that) what they each understood was not the same,” Gonzalez says. “Terms and conditions of sale in Mexico are not the same as in the U.S., where the Uniform Commercial Code applies. NAFTA has nothing to do with litigation.”

Gonzalez handled all the governmental compliance work for the Disney company that produced “Pearl Harbor,” which was shot in the Fox studio on the Baja coast built originally to film “Titanic.” One of his “Pearl Harbor” duties involved working with the secretary of defense to import arms and explosives into Mexico.

“The production schedules of these people interconnect, so a delay in production could cost a million bucks a day,” Gonzalez says. The project cost $150 million and employed 350 cast and crew members in Mexico. An equal number of Mexican workers pitched in.

As for terror and recession, Gonzalez says, they “haven’t had the same kind of impact on us as elsewhere; business has not slowed down in the last six weeks.” Although the trade route occasionally may be littered with obstacles, Gonzalez says, “the way to do business in a foreign country is to understand the law and work within it.”