Fighting Patent Infringement Is Expensive!

Should you own a patent that is being infringed, your only course of action is to file a lawsuit against the infringer. There are patent owners who have launched patent infringement lawsuits that resulted in multi-million dollar awards for patent-owner-plaintiff. Thats the good news. The bad news is that mounting a patent infringement lawsuit can easily cost millions of dollars! There are two elements to the cost structure of a patent infringement lawsuit.

Legal Fees: Among all types of civil litigation, IP (intellectual property) lawsuits are among the most expensive. Total costs may reach the $2 to $5 million range. Why so expensive? First of all, it takes hundreds or even thousands of hours of time to prepare and try an IP lawsuit, and IP litigators are highly specialized attorneys who charge hundreds of dollars an hour. The litigation is complicated, and mounting an effective offense is time-consuming of the time of some very expensive people!

Disbursements: In addition to legal fees, there are numerous out-of-pocket expenses that are called disbursements. These include filing fees and travel expenses, as well as hiring court reporters to create transcripts of all depositions. Sometimes depositions are videotaped, and that is another cost. Outside experts are often brought in to do research and to appear as expert witnesses. Sometimes displays have to be created to demonstrate to the jury how the patent works and how it is being infringed. Many law firms use jury consultants to make their presentations more effective and to fine tune their presentation to the actual jury that hears the case.

Bottom Line: A patent infringement lawsuit tends to be a classic David-versus-Goliath battle, with the patent owner the under-funded David facing off against the large corporate Goliath with almost unlimited financial resources. It is not a major expense for a multi-billion dollar corporation to spend a few million dollars defending itself in federal court. It is quite another thing for an individual or a small business to come up with a few million dollars to pursue the infringer of its patent.

There Is a Solution: The old expression that necessity is the mother of invention really applies here. A new type of business, the patent enforcement firm, was created to address just this issue. There are just a handful of these businesses, but they fill a real need helping the patent owner whose patent has been infringed, but cannot afford to fund a patent infringement lawsuit. Patent enforcement firms fund and manage the entire process in exchange for a share of any awards or settlements that result from the lawsuit. They work on what is known as a contingency basis. The patent enforcement firm hires a law firm, manages the entire lawsuit, and pays for everything. When they either win the case at trial or reach an out-of-court settlement, they usually split the proceeds with the patent owner. If they go to trial and lose, AND they fail to reach a settlement with the defendant(s), they write off all the money they invested in the lawsuit. The patent enforcement firm assumes all the risk!

They Pick Their Fights: Needless to say, these patent enforcement firms are very selective in whom they chose to represent since they make a huge financial commitment to a client.