The market for contingent fee representation in patent related litigations has expanded rapidly in the last two decades. In the past, it used to be on an hourly fee basis, and this came with a lot of sense given that it appeared to be a wrong case for this type of representation. The cases were very expensive to litigate and they took years for a resolution to be reached. The outcomes were also highly unpredictable. But it seems things have suddenly changed and there is a substantial market for the patent litigation contingency fee.
However, there is a lot to understand about writing letters, filing patent applications and even handling the lawsuits on the basis of the contingent fee. In several cases, the client ends up losing. This is due to high amount the law firm ends up taking should they charged the client on this basis.
Assume that a client need a demand letter for $120,000 to be written on the contingency fee and that the law firm keeps one third of the proceeds as their settlement, then it clearly implies that should the letter be successful, the law firm takes $40,000. The normal charges for this kind of demand letter is unlikely to exceed $500, As such, the client will have lost $35,000 just because of this arrangement.
When it comes to the filing of the patent application, the same logic applies. The legal charges for the filing can be about $5,000 to assist in preparation for the mechanical application. If the client proposes that this fee should be waived and instead the firm goes into the deal of participating in the profits from that innovation, the client can easily pay huge sums in excess of $5,000.
The law firm also stands to lose should the innovation fail to yield commercial success. In this case, after dedicating not less than two weeks working on the application, the firm gets no revenue. This is the case even though the bills related to overhead charges keep accumulating.
In reality, the quality of the patent does not have the direction in the success of innovation; instead, it depends on the marketing campaign carried out by the innovator. As such, if the innovator fails to market the product, then the law firm stands a chance of losing.
However, this reasoning does not apply in personal injury cases and similar lawsuits. In this case, the only issue is damages and it means that the liability is clear. Most of the PI law firms do not accept the case when liability is not clear. As such, to them, it is more on how much the payment is, they are not gambling, whether there will be a payment or not.
However, in the case intellectual property rights, there is a big room to dispute the liability. The infringer who is the accused has liberty to dispute the patent liability by simply citing any prior art that had not been cited by the examiner. Most patent infringement suits lasts for not less than two years, and the full attention of at least one attorney is required all this time. As such, very few firms will accept the arrangement given that there is no guarantee that the suit will be won.
However, there is a lot to understand about writing letters, filing patent applications and even handling the lawsuits on the basis of the contingent fee. In several cases, the client ends up losing. This is due to high amount the law firm ends up taking should they charged the client on this basis.
Assume that a client need a demand letter for $120,000 to be written on the contingency fee and that the law firm keeps one third of the proceeds as their settlement, then it clearly implies that should the letter be successful, the law firm takes $40,000. The normal charges for this kind of demand letter is unlikely to exceed $500, As such, the client will have lost $35,000 just because of this arrangement.
When it comes to the filing of the patent application, the same logic applies. The legal charges for the filing can be about $5,000 to assist in preparation for the mechanical application. If the client proposes that this fee should be waived and instead the firm goes into the deal of participating in the profits from that innovation, the client can easily pay huge sums in excess of $5,000.
The law firm also stands to lose should the innovation fail to yield commercial success. In this case, after dedicating not less than two weeks working on the application, the firm gets no revenue. This is the case even though the bills related to overhead charges keep accumulating.
In reality, the quality of the patent does not have the direction in the success of innovation; instead, it depends on the marketing campaign carried out by the innovator. As such, if the innovator fails to market the product, then the law firm stands a chance of losing.
However, this reasoning does not apply in personal injury cases and similar lawsuits. In this case, the only issue is damages and it means that the liability is clear. Most of the PI law firms do not accept the case when liability is not clear. As such, to them, it is more on how much the payment is, they are not gambling, whether there will be a payment or not.
However, in the case intellectual property rights, there is a big room to dispute the liability. The infringer who is the accused has liberty to dispute the patent liability by simply citing any prior art that had not been cited by the examiner. Most patent infringement suits lasts for not less than two years, and the full attention of at least one attorney is required all this time. As such, very few firms will accept the arrangement given that there is no guarantee that the suit will be won.
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