It is a fact that there has been a big in contingent representation in the patent litigation. Unlike most contingent representations such as personal injury, medical malpractice, and product liability suits, there is a big difference when it patent litigation contingency fee. First, there is high uncertainty in this litigation and the costs of litigation the claim is also significantly higher. The other major difference is that the underlying infringement claims are freely assignable. These unique characteristics should help the client to understand the implications of the agreement to them and to the law firm.
There are several responsibilities that a law firm can play in relation to patent. These ranges from simple activities like writing demand letters and filing the patent application to more challenging assignments like the litigating the suit. Should the law firm and the client adopt the contingency arrangement, then the litigant is paid part of the proceeds from the successful litigation at an agreed percentage. The normal fee charged for such services becomes invalid in this scenario.
Take an example of a client who wants a demand letter for $90,000 written on the basis of contingency fee basis. If this client agrees that the law firm keeps one third of the fee, it means that the firm gets $30,000 if the letter yields payment. However, the same letter normally costs $350 or thereabout. As such, the client is better off just paying the letter drafting fee and then keep all the proceeds.
In the same way, you can use this logic when filing a patent application. Normally, the legal charge is around $5,000 but can vary depending on a number of factors. However, the client may agree that instead of a direct charge, the law firm waives the fee and goes into a profit sharing deal. Should the innovation be successful, then the client will have to pay in excess of the normal service charge.
It is also possible that the innovation fails to yield the expected commercial success. In this case, it means that all the work that went into drafting the application which may run into weeks is simply a loss on the part of the law firm. The overhead bills will still be accumulating regardless of the arrangement the firm goes into.
Since it is the inventor who has the power to market the innovation and therefore the control on the commercial success of the innovation, the law firm will fail not as a result of their work but as a result of poor marketing campaign by the inventor.
The personal injury firms (PI), the medical malpractice and even product liability cases are more predictable and take shorter time to be resolved. In these cases, the litigant is not worried whether there will be payment or not, the big question is how much will be paid.
To worsen the situation, the underlying infringement claims can be reassigned freely. The infringer easily disputes the patent liability through citing the prior art that was not cited by the examiner. This, coupled with the fact that the litigation can take years and the outcome is unpredictable make contingency arrangement more difficult.
There are several responsibilities that a law firm can play in relation to patent. These ranges from simple activities like writing demand letters and filing the patent application to more challenging assignments like the litigating the suit. Should the law firm and the client adopt the contingency arrangement, then the litigant is paid part of the proceeds from the successful litigation at an agreed percentage. The normal fee charged for such services becomes invalid in this scenario.
Take an example of a client who wants a demand letter for $90,000 written on the basis of contingency fee basis. If this client agrees that the law firm keeps one third of the fee, it means that the firm gets $30,000 if the letter yields payment. However, the same letter normally costs $350 or thereabout. As such, the client is better off just paying the letter drafting fee and then keep all the proceeds.
In the same way, you can use this logic when filing a patent application. Normally, the legal charge is around $5,000 but can vary depending on a number of factors. However, the client may agree that instead of a direct charge, the law firm waives the fee and goes into a profit sharing deal. Should the innovation be successful, then the client will have to pay in excess of the normal service charge.
It is also possible that the innovation fails to yield the expected commercial success. In this case, it means that all the work that went into drafting the application which may run into weeks is simply a loss on the part of the law firm. The overhead bills will still be accumulating regardless of the arrangement the firm goes into.
Since it is the inventor who has the power to market the innovation and therefore the control on the commercial success of the innovation, the law firm will fail not as a result of their work but as a result of poor marketing campaign by the inventor.
The personal injury firms (PI), the medical malpractice and even product liability cases are more predictable and take shorter time to be resolved. In these cases, the litigant is not worried whether there will be payment or not, the big question is how much will be paid.
To worsen the situation, the underlying infringement claims can be reassigned freely. The infringer easily disputes the patent liability through citing the prior art that was not cited by the examiner. This, coupled with the fact that the litigation can take years and the outcome is unpredictable make contingency arrangement more difficult.
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