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Patent Litigation Cost


How Much Does Patent Litigation Cost?

 
low costLow: A Verbal Opinion on a Patent Infringement Can Cost $5,000-$10,000+high costHigh: Major Patent Litigation Can Cost Hundreds of Thousands to Millions of Dollars

A patent is the registered legal ownership of an original and useful invention or process. Patent infringement occurs when someone uses patented technology or design without the owner's legal permission. Or someone who wants to use specific technology/design can sue, challenging the validity of a patent and claiming it should be available for use. Since patents are governed by federal law, patent litigation is brought in federal district court (rather than state court). Patent litigation is often time-consuming and extremely costly.

Typical costs:

  • According to survey data from the American Intellectual Property Law Association[1] (AIPLA), when attorneys from major metropolitan cities work on patent cases where the plaintiff is seeking damages of $25 million or less, total litigation costs run $600,000-$2 million for cases settled before going to trial, and $1.2 million -$3.5 million if they go through trial and appeal. For cases involving more than $25 million the AIPLA says pretrial litigation costs are $1.4 million -$4 million and jump to $2.5 million -$6 million if the cases go through trial and appeal. In cases that goes to trial, the judge has the option to order the losing party to pay the winning party's legal fees, but only in exceptional circumstances (such as fraud or bad faith). Going to trial is rare in patent litigation; less than 5 percent of cases go to trial.
  • Traditionally, patent attorneys accept patent litigation cases strictly on an hourly basis, at $100-$500 an hour, and costs quickly skyrocket. More recently some attorneys have accepted patent litigation on contingency, where the lawyer earns one-third to one-half of any settlement or court judgment (the longer and more complex the case, the higher the percentage paid to the attorney -- especially if it goes to trial). Any expenses such as expert witnesses and court costs are also reimbursed out of the settlement/judgment. In this case, you do not owe any legal or other fees if you do not win the case.
  • More often than straight contingency, an attorney may accept a patent litigation case on a partial hourly/partial contingency basis with the client paying court costs and other agreed-upon fees as they occur. Whether you're paying on an hourly or partial-contingency basis, usually you will be required to pay the attorney an advance fee known as a retainer. As costs occur they're deducted from the retainer; when the fund is exhausted you will be billed for an additional payment. In some cases, the retainer fee may be nonrefundable even if total costs don't go that high.
  • If you've received a letter alleging that you've guilty of patent infringement because you're selling a certain product, according to the National Federation of Independent Business (NFIB) you can usually pay an attorney $5,000-$10,000 for a verbal opinion as to whether the product infringes on the patent, and if the attorney says you do not infringe the patent, pay another $5,000-$10,000 for a written opinion. Costs can be even higher if the case is complex. The NFIB also estimates that having a patent attorney evaluate the validity of the disputed patent could run $10,000-$15,000, with another $5,000-$10,000 to draft that evaluation in written form.
Related articles: Patent, Copyright, Trademark

What should be included:
  • Patent litigation is almost always complex, highly technical and time-consuming. Plaintiffs will charge that the defendants should be legally stopped from infringing their legitimate patent, and often the defendants will argue that the patent should be ruled invalid.
  • After a claim is filed and a litigation schedule set, the exchange of documents and information in the process known as discovery can last 9 months to a year or more -- and there's a risk that as part of this process, proprietary and confidential information may become public. TechnologyReview.com summarizes the patent litigation process[2] and Fenwick & West LLP, a national law firm, provides a more detailed introduction[3] to patent litigation.
  • An international law firm explains how to survive US patent litigation[4] from an international perspective.
Shopping for patent litigation:
  • Patents are a form of intellectual property, and litigation often requires specialized skills. Ask about the attorney's training and experience, and whether he or she has a college degree in science, engineering or a related field. Lawyers.com explains what to do in a first meeting[5] with an intellectual property lawyers, and lists 12 general questions[6] to ask any potential lawyer.
  • Referrals to intellectual property attorneys are available from FindLaw.com[7] and Lawyers.com[8] .
  • Your lawyer should provide you with a written fee agreement. Be sure you understand if your legal fees are on an hourly, contingency or partial contingency basis, and what other costs you might have to pay.
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External Resources:
  1.  www.aipla.org/Pages/default.aspx
  2.  www.technologyreview.com/news/402686/patent-litigation-the-sport-of-kings/
  3.  www.fenwick.com/publications/pages/legal-faq-introduction-to-patent-litigation.aspx
  4.  www.fulbright.com/images/publications/AndersonHowToSurvive.pdf
  5.  intellectual-property.lawyers.com/Intellectual-Property-Meeting-with-a-Lawyer.html
  6.  research.lawyers.com/12-Questions-To-Ask-Your-Potential-Lawyer.html
  7.  lawyers.findlaw.com/lawyer/practice/Intellectual-Property-Law
  8.  www.lawyers.com/intellectual-property/find-law-firms-by-location/
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