Patent Lawsuit Funding On-Line
What Is Patent Lawsuit Funding? Patent funding - Prosecuting a patent infringement lawsuit is very costly. The total cost of a patent infringement lawsuit can run to a million dollars or more. Even a modest patent infringement lawsuit can cost $200,000 to $500,000. Not too many individuals, and not even too many businesses, can afford to fund a patent infringement lawsuit on their own. To successfully prosecute a patent infringement lawsuit, most plaintiffs need to find patent funding.
Why Is a Patent Infringement Lawsuit So Expensive? There are two separate costs to a patent infringement lawsuit – legal fees and disbursements.
1. Legal Fees: A litigator who tries patent infringement lawsuits will charge hundreds of dollars an hour, and it takes hundreds or even thousands of hours to prepare and try a patent infringement lawsuit. Despite what we see on television and in movies, most attorneys do not spend most of their time in a courtroom, but preparing to try the lawsuit – researching the facts and the law, filing briefs and responding to briefs filed by the defendant, deposing witnesses, locating expert witnesses and arranging for trial demonstratives. Since most civil lawsuits do not actually go to trial (most are settled out of court), most attorneys actually spend more time in negotiations with the defendant’s attorneys than they actually spend in a courtroom! There is simply no way a patent owner who is not wealthy can afford the legal fees associated with a patent infringement lawsuit without patent lawsuit funding!
2. Disbursements: In addition to the fees the attorney or law firm charges, filing a patent infringement lawsuit creates many out-of-pocket expenses that are known as “disbursements.” These include such items as filing fees, stenographers and/or videographers to record depositions, researching the case, locating and hiring expert witnesses, travel expenses, and creating trial demonstratives, exhibits used at trial that demonstrate for the judge and jury what the patent-at-trial is, how it works and how the defendant infringed it. Patent lawsuit funding also covers the cost of all of these items that are critical to successful prosecution of a patent infringement lawsuit.
Why All This Work If Most Lawsuits Don’t Go to Trial? While most civil lawsuits – including most patent infringement lawsuits – do not actually go to trial (they are settled out of court), the plaintiff’s attorney has to be ready to try the case before a judge and jury. It is not uncommon for expert witnesses to be hired and deposed by the defendant’s attorneys, only to find that they never actually testify in court because both sides decide to settle. Attorneys for both sides have to be ready to go to trial just in case they are not able to reach an out-of-court settlement. Patent lawsuit funding makes that level of readiness possible.
Patent Lawsuit Funding Leads to Strong Prosecution: In fact, patent lawsuit funding can be an important winning strategy for the plaintiff and attorney trying a patent infringement lawsuit. Having patent lawsuit funding lined up convinces the defendant and the defendant’s attorney that the plaintiff’s team is headstrong, confident, determined, prepared to go to trial, and (maybe most importantly) they will not run out of money! And, thereby, have to abandon the case. The impression the plaintiff needs to project is that they have such a good case that they would prefer going to court and taking their chances with a jury! Secure patent lawsuit funding empowers the plaintiff’s side to aggressively prosecute their patent infringement lawsuit, and such aggressive prosecution empowers the plaintiff’s and his or her attorneys to negotiate from strength when they sit down with the defendant’s attorney to work out a settlement.
While Lack of Patent Lawsuit Funding Can Spell Disaster! It would be a wonderful world if the good guys always won, and the bad guys always had to pay for their misdeeds in the civil law system, but that’s not the way things are. In the real world of civil law – and this often applies to a patent infringement lawsuit – some totally righteous lawsuits are lost, but not lost in a court of law. Many virtuous lawsuits are lost because the plaintiff had to walk away from the case because he or she ran out of funding! Many patent owners with infringed patents have filed totally legitimate patent infringement lawsuits, but they had to abandon their cases because they lacked the funds to prosecute their lawsuits to a successful conclusion!
Patent Lawsuit Funding Options: When it comes to funding a patent infringement lawsuit, there are essentially five funding options to consider and choose from.
Plaintiff Funding: The plaintiff simply covers all legal fees and disbursements himself (or herself or itself). That is only possible, however, if the plaintiff is wealthy or a large and profitable business that can afford to spend millions of dollars over a two to five-year period. All things considered, this is the best way to go if you can afford it.
2. Commercial Funding: Do not waste your time talking to a bank, as they simply do not finance litigation, but there are financial services companies that specialize in funding commercial litigation such as patent infringement lawsuits. These companies advance funds to plaintiffs in patent infringement lawsuits on a “contingency” basis. That means that re-payment of the advance is “contingent” on the outcome of the lawsuit. Such advances (they are not loans) are also “non-recourse.” That means that if the lawsuit does not produce an award at trial or an out-of-court settlement, the funding company writes off their loss and they have no “recourse” against the plaintiff to get their advance back. The only problem with commercial funding is that these companies will sometimes cease funding a lawsuit once they’ve invested $250,000 to $500,000, fearful of investing any more in the case. Commercial lawsuit funding only works if the plaintiff can get a solid commitment from the funding company to fund the entire lawsuit no matter how expensive it gets.
3. Partial Contingency Funding: There are patent litigators that will represent clients on a contingency basis. Some will take both their fees and disbursements on contingency while some will take just their fees on contingency. The firm will take a percentage of any award or settlement as their fee, and only if they produce an award or settlement for the client. While legal fees are the largest part of the cost of a patent infringement lawsuit, disbursements can easily run into the tens of thousands or hundreds of thousands of dollars, and funding for disbursements has to come from somewhere!
4. Hybrid Funding: Some plaintiffs combine No. 2 and No. 3. They arrange with a law firm to take their legal fees on a contingency basis, then go out and find a lawsuit funding company to finance the disbursements, so both the attorneys and the lawsuit funding company are paid from the award or settlement produced by the patent infringement lawsuit. There are two possible problems with this arrangement. Many commercial lawsuit funding companies will not consider funding a patent infringement lawsuit until an attorney has agreed to take on the case, so the plaintiff must first find an attorney to take the lawsuit on a partial contingency basis, then hope he can also line up funding for the disbursements, or he will have to abandon the case. Also, once the attorneys have taken their share of the award or settlement, and the patent funding company has been re-paid for its funding of the disbursements, how much will actually be left for the plaintiff?
5. 100% Contingency Funding: The best-of-all-worlds solution is to find a patent enforcement firm that will take your patent infringement lawsuit on a 100% contingency basis, covering both legal fees and disbursements from any award or settlement the lawsuit produces. Since a patent enforcement firm is not a law firm, it will line up a law firm to try the lawsuit, and the patent enforcement firm will provide full funding of all disbursements. Some patent enforcement firms provide some additional and very helpful services, and the better patent enforcement firms have an arrangement that minimizes legal and financial risks for the patent owner/plaintiff. A patent enforcement firm offers a comprehensive and seamless patent funding solution that substantially reduces the stress and anxiety that comes with prosecuting a patent infringement lawsuit.
Patent Lawsuit Funding Is a Key Element in a Successful Patent Infringement Lawsuit: A plaintiff must have a legitimate claim, and that claim must be provable in court, before that plaintiff can win a patent infringement lawsuit. And the plaintiff must have a competent and committed attorney. However, those two elements do not insure success. Without a source of patent funding for legal fees and disbursements, being right is not enough in the world of patent litigation.