The father and daughter lawyers behind Pac-Man and Beanie Babies

This article by Robert Loerzel originally appeared in Leading Lawyers magazine’s July 2010 issue.

When Pac-Man fever swept America in 1981, that little yellow guy with the round head and the big mouth did more than gobble up a bunch of dots on a screen.

Pac-Man also helped to establish a new legal principle: the idea that a video game’s content deserves copyright protection, just like a movie, book or song.

Of course, Pac-Man couldn’t have won the day in court without a good lawyer. That attorney was A. Sidney Katz, a leading expert on intellectual property.

Sixteen years later, the United States got caught up in another craze when people scrambled to buy those cute little critters called Beanie Babies. This time, another intellectual-property lawyer named Katz was part of a team that led a crackdown on counterfeit versions of the plush toys. That was Julie A. Katz, Sidney’s daughter.

They’re both partners at the Chicago office of Husch Blackwell Sanders Welsh & Katz. They’re both highly regarded for their work with patents, copyrights and trademarks. And they aren’t the only members of the Katz family working at the firm. Sidney’s younger daughter, Michele, is a partner, too.

The Katz sisters have proved themselves as lawyers, and their father proudly says he enjoys working alongside them.

“It encourages me not to retire,” says Sidney, who is 70. “I would miss working with them. I really enjoy it.”

Since Julie started working at her father’s law firm in 1990, he has been one of her legal mentors.

“He’s like a chess player, able to see all the moves in advance,” says Julie, 45.

Neither Sidney nor Julie wanted to become lawyers when they were children. Both decided to pursue a legal career when they were already far along with their college studies.

Early Interest in Machines

In Sidney’s case, he thought he was headed for a career in engineering or science. Katz, who grew up on Chicago’s West Side, says he has liked tinkering with machines for as long as he can remember.

“I was told that as a small child, my first word was ‘light,’” he says. “I was always interested in mechanical things.”

Good at math and science, Katz took lots of shop classes at Carter Harrison Technical High School. A son of Lithuanian immigrants, Katz was the first member of his family to attend college. He studied electrical engineering at the Illinois Institute of Technology, but began to feel discouraged after he spent a summer designing transistor circuits in a windowless room.

“I decided that I didn’t want to do that for the rest of my life,” Katz says. “I felt I needed more contact with people.”

During his senior year at IIT, Katz attended a guest lecture by some patent lawyers. He decided it was what he wanted to do. He could use his knowledge of science and engineering, but he would also be dealing more with people.

Katz got advice from a successful patent attorney, Max Dressler of Glencoe. Dressler told him to enroll at George Washington University in Washington, D.C., because Dressler thought it was the best school at the time that had a strong curriculum in patent law. He also suggested that Katz get a job at the U.S. Patent Office.

“That’s where you’re really going to learn the stuff,” Dressler told Sidney.

And that’s precisely what Katz did. He took night classes at George Washington University Law School for four years while working full-time—first as a patent examiner for the government and then as a clerk in a patent firm.

“I volunteered for everything nobody wanted to handle,” Katz says. “They were interesting cases.”

Katz, who received his law degree in 1966, has supported his alma mater in recent years, endowing the A. Sidney Katz Intellectual Property Law Speaker Series that began in 2009 as well as campus building projects at George Washington. Notable is the A. Sidney Katz Archway at 20th Street between G and H that connects 20th to the University Yard.

Early in his career, Katz worked for 15 years at the Chicago law firm of Fitch, Even, Tabin, Flannery & Welsh. He made partner in 1971.

Pac-Man Fever

One of the most celebrated chapters in Katz’s career began in 1980, when a video game called “Puckman” (or “Pok-U-Man”) debuted in Japan. At the time, many leading experts on intellectual property law insisted that the audio and video contents of video games could not be copyrighted.

“The question was: Is it possible to get protection for video games—on what you see and what you hear, not just on the electronics or the computer—as if it were a motion picture?” Katz says.

“That was very controversial at the time,” he says. Katz disagreed with what many experts believed.

“There was a new Copyright Act of 1976 that had become effective in ’78,” he says. “The old copyright attorneys were still thinking of the 1905 act. I read the new act, and I thought, ‘There’s not a problem. I understand how these games work.’”

Katz says his background in electrical engineering gave him an edge over lawyers who didn’t understand how the games worked.

Katz championed the idea that video games were protected by copyright. That got him hired as a lawyer for the Chicago game-maker Midway Manufacturing Co., which was owned by Bally.

“They took me to Japan, because that’s where all the creativity was coming from, after the initial ‘Pong’ games,” Katz recalls.

Bally-Midway’s video game scouts liked what they saw when they played the game that would become known as “Pac-Man.” So the Americans met with Masaya Nakamura, the head of Namco, the company that created the game.

“We went to meet Mr. Nakamura and his daughter at their place of business, which was a little plant on the outskirts of Tokyo,” Katz says.

Nakamura told the Americans that they would have to fight against counterfeit “Pac-Man” games if they wanted to sell the game in the United States. But Nakamura didn’t want to get mixed up in that sort of litigation.

“Don’t involve me,” he says.

Katz told Nakamura that he had a solution. “That’s easy,” he recalls saying. “All you have to do is assign all your rights to Midway, and then they can defend it.”

Katz wrote out an agreement by hand, and Nakamura’s daughter typed it up. The Midway and Namco officials signed it, opening the door for “Pac-Man” to invade the United States and become the most popular arcade game in history.

In the deal, Namco gave Midway “a simple assignment of all rights, title, and interest in every aspect of the ‘Pac-Man’ game … in the so-called Western Hemisphere,” Katz says.

But the questions raised later about the agreement were not so simple.

“There were many litigations over that little document,” Katz says. “What was meant by Western Hemisphere? What was assigned? Was it just the video game? What about the merchandising rights? Midway claimed they owned everything—pajamas, animated cartoons.”

In one case, Midway bought the rights to an unauthorized sequel, “Ms. Pac-Man.” Namco sued, and Midway eventually struck a deal with Namco, making “Ms. Pac-Man” legit. Eventually, Midway turned the “Pac-Man” rights back over to Namco.

As Katz and a team of lawyers fought off copycat versions of “Pac-Man,” they persuaded the courts that video games were covered by copyright. As Katz explains, the key question was whether the pictures and sounds on a video game screen were “fixed” in a tangible medium of expression.

“Under the new copyright law, the work had to be fixed,” Katz says.

But a video game seems to be different each time someone plays it. So is it “fixed”? Katz successfully argued that it is. Indeed, Katz won the Patent Resource Group Prize in 1982 (a CLE organization in the IP field) for outstanding contribution to intellectual property law in connection with the protection of videogames.

“Everything was predetermined,” he says. “Your joystick was just making a selection of predetermined things. You were not creating anything that wasn’t fixed.”

A memento of Katz’s days as the “Pac-Man” lawyer hangs on the wall of his office—a gold record of the 1981 hit song “Pac-Man Fever” by Buckner & Garcia, which sold over a million copies.

Columbia Records gave him the single as well as a gold LP, showing appreciation for the deal Katz had worked out after Buckner & Garcia failed to get Bally-Midway’s permission to use “Pac-Man.”

“Columbia told me that I deserved a gold record because everybody in the room got something, and we settled the whole matter without any litigation, but I was the only one that was being paid by the hour,” Katz says. “Those were really the only gold records I’ve ever gotten in my career. I tell people I got the record for agreeing not to sing on it.”

Finding Her Way into Law

Sidney’s daughter Julie heard about his exploits in video game litigation while all this was going on, but she didn’t think about becoming a lawyer. Not yet, anyway.

“I was much more into the art and design aspect of creative life,” says Julie, who majored in interior design and English at Indiana University.

Like her father before her, Julie had an experience with a summer job that made her rethink her career choice. “I spent a summer working in the furniture industry and that changed my perspective,” she says.

Julie began thinking about law, which seemed like a more stable career.

Even after Julie began studying law at the University of Illinois, she did not immediately consider specializing in intellectual property, as her father had. But when she spent a summer working for U.S. Appellate Court Judge Richard D. Cudahy, the cases that grabbed her attention were the ones involving intellectual property.

Julie found it easy to explain IP cases to other people. They’re intangible property rights, but about tangible things, she says.

“I could pick up a can of soda and say, ‘See this R in the circle? I get these for people. And I help them enforce their rights, so other people can’t rip them off.’ And that’s a concept that people really understand.”

By the time Julie Katz received her law degree, her father had launched his own firm with Don Welsh. Opening in 1983, Welsh & Katz originally had six attorneys specializing in IP litigation. (Welsh retired in 1991 and died in 1998.)

Over the coming 25 years, Welsh & Katz grew to 50 attorneys, but Sidney Katz recalls how much of a struggle it was to pay bills in the early days. Bally-Midway was the firm’s biggest client, and one day Katz went to the company’s offices to deliver a $100,000 bill to Bally-Midway treasurer Hank Ross.

“I handed it to him and then I sat down in a chair in his office. He said, ‘What are you doing?’ … I said, ‘I don’t know how to tell you this, Hank, but we’re kind of in a hurry to get the check.’” Ross laughed and took Katz to the accounting department, handing him that much-needed check.

Katz credits his wife, Sheela, whom he’d married during law school, for keeping the family afloat during those years.

“She’s a registered nurse,” he says. “She worked her ass off, working full shifts and the 3 p.m.-to-midnight shift. She really carried the ball.”

As Julie Katz finished law school in 1990, she received a job offer from another law firm, but that firm promptly went out of business just prior to graduation. So she turned to Welsh & Katz for a job. She had worked there during summers when she was in college and law school, so her father’s partners already knew she was a hard worker.

Sidney says he asked his partners what they thought about hiring her. They agreed that Julie would be a good hire, regardless of whether she was his daughter.

Teaming Up

At first, Sidney did not work directly with Julie. But several years later, they teamed up on a case involving the video game “Awesome Possum.”

“That’s when we really started having a lot of fun,” Sidney says.

The Katzes defended Time-Warner and its Atari subsidiary against allegations that Awesome Possum had been plagiarized. A schoolteacher had written a manuscript about an opossum similar to the environmentally conscious superhero in the game. The teacher claimed Atari had copied his idea.

“The story was very similar,” Sidney says.

“But when we started digging,” Julie says, “it turned out that they really were completely independently created.”

The father-and-daughter legal team won a final judgment when they eventually persuaded a federal court that the game had not been plagiarized. But first, they had to track down a dozen people who’d created the game for Atari.

It didn’t help that Time-Warner had laid off all of these workers when it bought Atari. Not surprisingly, they weren’t too enthusiastic about helping the company that had fired them.

“What we had on our side was that they had pride in what they’d created,” Julie says. “They took it personally. … Despite what they thought about their former employer, they wanted their names cleared.”

Sidney was impressed at how his daughter tenaciously found all of the witnesses and persuaded them to help.

“No matter what we had to do, she wasn’t going to quit,” he says.

Julie Katz’s persistence paid off again when the Beanie Babies toy fad hit in late 1997. Welsh & Katz represented Ty Inc., the Chicago-area company that made the soft toys. When counterfeiters began cashing in on the popularity of the Beanie Babies, both Sidney and Julie Katz worked on the campaign to stop knockoffs, together with a team of Welsh & Katz attorneys and a former assistant U.S. attorney who had joined the firm earlier.

“We had so many different lawsuits happening at the same time against infringers of the Beanie Babies copyrights and trademark,” Julie says—more than 300 cases.

Julie also worked with U.S. Customs agents, helping them identify counterfeit Beanie Babies toys as they entered the country.

“It’s that chess game,” she says. “Anticipate and try to stop it before it becomes litigation. … I think we stopped over half a million counterfeit Beanie Babies® plush toys from coming into the United States illegally.”

By blocking those toys, the Welsh & Katz team wasn’t just helping Ty Inc. Sidney says their actions also protected consumers—“So they knew what they were getting. When you buy a Beanie Baby, you know you’re getting something that’s safe.”

Global Reputation

Lisa Ritson, an intellectual property lawyer in Sydney, Australia, who handled efforts against counterfeit Beanie Babies in her country, praised the way Julie Katz coordinated the campaign.

“She’s always been very responsive, very proficient, and just very easy to deal with,” Ritson says, adding that Sidney and Julie Katz both have strong interpersonal skills. “It makes it easy to work with them.”

Ivor Hughes, a Toronto lawyer who has worked with the Katzes, says Sidney and Julie share some of the same qualities.

“She really, really cares about the clients,” Hughes says. “And Sid does completely … They’re honest. They have integrity.”

Like many IP lawyers from around the world, Ritson and Hughes got to know the Katzes at global gatherings such as International Trademark Association meetings. Sidney and Julie are both known for their social networking and active participation in various organizations, both here and abroad.

One reason for Julie’s rising prominence in the field is her commitment to publishing articles and making presentations at conferences. Last year, the magazine Brands in the Boardroom published her article “The Long and Winding Road: Successful Trademark Litigation in the United States.” She also wrote the chapter about the United States in World Trademark Review’s Pharmaceutical Trademarks 2009-2010: A Global Guide.

In 2008, Welsh & Katz merged with Husch Blackwell Sanders. Sidney Katz says it was a good time for a merger because the field of intellectual-property law had changed.

It used to be an area of the law handled mostly by small specialty firms. Bigger firms would refer clients to these boutiques. But now, Katz says, many large firms have their own IP departments.

“You weren’t going to get referrals from them, because they were going to do it themselves,” Katz says. “It also helps in IP litigation to have a large platform.”

Sidney Katz is now the chairman of Husch Blackwell Sanders Welsh & Katz’s national IP group, which includes about 90 lawyers.

In many recent cases, Sidney and Julie Katz, as part of a team of lawyers, are fighting for pharmaceutical companies to get legal clearance to sell generic drugs. The firm has a good number of lawyers with doctorates in chemistry who, together with the trial lawyers and technical experts, assemble the complicated evidence.

“It has to be presented in court in a way that a judge who may never have studied chemistry can understand,” Katz says.

Julie Katz says this sort of litigation can help people by lowering drug costs.

“That’s a huge economic benefit for people, especially these days,” she says.

Michele S. Katz, 34, who joined Welsh & Katz in 2000, also specializes in intellectual property. Sidney and Sheela Katz also have a son, Aaron, who is a financial analyst for Kraft.

The Katz sisters are both raising families. Julie and her husband have a 3-year-old son, and Michele and her husband have a 4-year-old daughter and a 7-month-old son. Each sister also has two dogs.

Michele says she feels fortunate to work with her father and sister.

“They’re both excellent mentors,” she says. “My sister in life is a very straight shooter. She’s very much like that as she practices law.”

“My father is one of those funny fathers who likes to crack jokes,” Michele continues. “It’s his overall demeanor. He knows what he’s doing, there’s just no question. So he doesn’t get caught up in a lot of the gamesmanship that can happen in very aggressive litigations.”

Sidney Katz smiles as he notes how his daughters are carrying on the family tradition.

“When I used to go to meetings, I was Sid Katz and she was Sid Katz’s daughter,” Sidney says. “But now when I go to the meetings, people say, ‘Oh, you’re Julie’s father. Say hello to Julie for me.’”

Or as Michele tells the story: “Some people actually tell him, ‘Oh, you’re the Katz sisters’ father.’ I think he really gets a kick out of that.”

Photo from Leading Lawyers magazine