funding patent litigations
DESCRIPTION
This is the presentation I gave at the AIPF Annual Meeting yesterday. Please let me know if you have any comments or thoughts. Thanks.TRANSCRIPT
![Page 1: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/1.jpg)
FUNDING PATENT LITIGATIONSChandran B. Iyer
Sughrue Mion, PLLC
(202) 663-7466
![Page 2: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/2.jpg)
2
CONUNDRUM – PART 1
• Need to innovate• Need to protect innovation• Seek patent protection
![Page 3: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/3.jpg)
3
CONUNDRUM – PART 2
• Pace of Imitation is Accelerating• Widespread imitation only takes months• Protect your investment• Lawsuit• How to fund it
![Page 4: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/4.jpg)
4
COST OF PATENT LITIGATION
• Expensive• Fairly consistent cost• No chance of decreasing
![Page 5: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/5.jpg)
5
FUNDING A PATENT CASE
Billable Hours Contingency Many other arrangements in-between
Contingency cases play an important role It’s an equalizer Gives everyone a chance to redress an injury
But, the funding arrangement ultimately depends on the type of plaintiff, defendants’ potential strategy, litigation strategy and
![Page 6: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/6.jpg)
6
RISK TOLERANCE
More firms are willing to take on contingency cases.
Many of the big companies are requiring contingency arrangements
But, what’s the threshold?
![Page 7: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/7.jpg)
7
NATURE OF PLAINTIFF
Why is this relevant – because it impacts the fee arrangement
Different types of patent holders Companies that make products
All other than the largest companies should be exploring alternative fee structures GE / Cisco
NPES NPEs is a broad term – encompasses all types
![Page 8: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/8.jpg)
8
NPES
Entities that use their patents to license or bring a law suit, without any intention of practicing the technology of that patent.
![Page 9: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/9.jpg)
9
TYPES OF NPES
Non-manufacturing holding companies that acquire patents from inventors Intellectual Ventures Acacia
Companies or research group that develop inventions for purpose of licensing and enforcement, not manufacturing Universities Jerome Lemelson Thomas Edison
![Page 10: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/10.jpg)
10
TYPES OF NPES
Failed companies that developed patents initially Kodak
Companies that acquire patents to bring suit against competitors Broadcom
![Page 11: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/11.jpg)
11
ANTICIPATING DEFENDANTS’ MOVES
AIA has made it more difficult for NPE Plaintiffs Joinder rules Post-Grant Proceedings
![Page 12: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/12.jpg)
12
ADDITIONAL CONSIDERATIONS
Quality of Pre-Filing Investigation Possibility of Early Settlement Discovery Needed Increased use of the ITC
![Page 13: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/13.jpg)
13
PRE-FILING INVESTIGATION
Quality of pre-filing investigations More mature and experienced NPE’s have
developed thorough investigations over time. Newer NPE’s are less willing to invest in a
thorough pre-filing investigation. Need to satisfy Rule 11 obligations Could end up with motion practice in litigation
![Page 14: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/14.jpg)
14
HOW QUICKLY CAN THE CASE SETTLE
NPEs are holding out. Increasingly wanting to settle on their terms
![Page 15: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/15.jpg)
15
DISCOVERY & PROOF
Discovery increases cost of litigation What’s the technology of the patent
Nature of the claims How much discovery is anticipated
3rd party discovery – indirect infringement case? Spoliation issue
![Page 16: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/16.jpg)
16
ITC AS AN OPTION
ITC administrative hearings are becoming more common as an alternative or lead in to NPE litigation.
![Page 17: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/17.jpg)
17
VARIOUS FUNDING OPTIONS
Strict Billable Hours Law firm’s compensation is based on hourly rate
for each attorney working on a case. Only the largest companies should use this
arrangement. Client is unsure on how much to budget for a
case. Law firm’s interest and client’s interests are not
fully aligned. Client has all the risk of litigation
![Page 18: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/18.jpg)
18
VARIOUS FUNDING OPTIONS
Pure Contingency Fees Attorney’s compensation is contingent on
settling or winning a financial award Attorney is paid a percentage of the client’s
recovery Percentage escalates depending on key events or as
case progresses.
Client is generally responsible for expenses Client’s and law firm’s interests are fully
aligned Sharing of risk and reward
![Page 19: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/19.jpg)
19
VARIOUS FUNDING OPTIONS
Partial Contingency Fees Attorney’s compensation is portion of hourly rate
plus a smaller percentage of any recoveries in the lawsuit
Client is generally responsible for expenses Client’s and law firm’s interests are still
somewhat aligned. Structure can be used for defense
![Page 20: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/20.jpg)
20
VARIOUS FUNDING OPTIONS
Fixed or Flat Fee Law firm will handle a matter for a sum certain or
for a fixed amount per month Sum certain can be paid upfront Fixed amount does not need to have a cap
Client’s and law firm’s interests are aligned. Structure can be used for defense
![Page 21: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/21.jpg)
21
VARIOUS FUNDING OPTIONS
Budgeting and Capping Each phase has a budget A cap on total amount spent
Tough to estimate
Many companies do this in defending suits
![Page 22: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/22.jpg)
22
VARIOUS FUNDING OPTIONS
Success Bonus Part of the money is paid up front, and a portion
is withheld if successful Have to define success Use when monetary damages are not high
Can be used in defense context Invalidity Limiting damages
![Page 23: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/23.jpg)
23
VARIOUS FUNDING OPTIONS
Insurance Check if there is coverage for defense under CGL
policy IP Abatement policies
Will fund enforcement of patent Helps with settlement
Defendants cannot run out the clock IP Defense policies
![Page 24: Funding Patent Litigations](https://reader035.vdocuments.us/reader035/viewer/2022062510/54b5e23a4a7959d6758b458d/html5/thumbnails/24.jpg)
24
Questions?