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26 November 2018Jurisdiction reportsPaul J Sutton

US jurisdiction report: Patent financing to the rescue

After being shown the competitor’s products and reviewing the file history of proceedings before the US Patent and Trademark Office, the counsel confirms confidently that there is literal infringement of several of the patent claims. He reminds the CEO that while in a patent infringement jury trial one can never be guaranteed success, he feels certain that were he to handle such a case, he would be able to bring home a jury trial victory.

Now comes the difficult part of this story. When the CEO asks patent counsel if he will represent company X against the competitor, and what it will cost, he receives both good and bad news. The good news is that patent counsel would be thrilled to handle what he believes is a winning case. The bad news is that the fees and costs of representation could reach or even exceed $5 million. Company X is simply in no financial position to be able to afford such fees.

When the CEO asks counsel if he would represent company X in a patent infringement litigation on a contingency fee basis, counsel apologises and says that he and his small firm will be unable to do so.

Real-world reality

The reader might be surprised by how often this hypothetical scenario actually plays out in the business world. There are many companies with valid patents that are infringed by players bent on ripping off the technological advances of others who have no recourse but to watch the rip-off artists benefit from their years of research and development. Some will be lucky enough to find patent litigators who are financially able to experience the thrill of taking on patent litigation on a contingency fee basis, but it’s fair to say that this is an exception to the rule.

This author has taken on several contingency fee cases and has come to realise that it is only after the case has been adjudicated does the title of “foolish” or “brilliant” apply. Winning for the contingency lawyer does not require obtaining a final judgment of patent validity and infringement. If the case settles with a reasonable compromise payment, this can certainly be seen as a victory.

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