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What is a Patent Contingency Fee?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 04 December 2016
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    Conjecture Corporation
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A patent contingency fee is a fee structure for patent litigation where an attorney agrees to take a case in exchange for a percentage of the proceeds if the case is successful. For people with limited resources, this fee structure can provide access to legal remedies for addressing patent infringement. Attorneys take on a risk when doing this, and they usually evaluate a case very carefully before accepting it on a contingency fee basis. If they don't feel the case has a strong chance of winning, they may only agree to represent it on a different fee structure, such as an hourly up front rate or a blended rate, where some money is paid up front and some is paid as a contingency if the case wins.

In a patent contingency fee case, the attorneys field the litigation costs up front, including filing fees for court, payments to expert witnesses, and the money for paying their own staff to do research or case preparation. Patent litigation is often extremely complex, and this can eat up substantial resources if the attorney wants to present a strong, solid case in court with a good chance of winning. Clients can be provided with statements to show what kinds of expenses are being incurred on their behalf so they have an idea of how much the case costs to litigate.

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If the attorney wins the patent contingency fee case, when the damages are awarded, the attorney is entitled to a share of the funds. The contingency fee agreement will indicate the percentage available to the attorney and agreements can vary, with attorneys taking varying percentages depending on the complexity of the case and the anticipated amount of damages. The rest of the money goes to the client.

For people who want to pursue patent litigation, a patent contingency fee can provide access to experienced attorneys with skills in this area of the law, offering more of a chance of being successful in court. Small companies and inventors with limited means often do not have funds available to pursue cases in court, especially if they are suing a major company with deep pockets. Such companies may be able to successfully meet a case in court if the plaintiff has limited resources.

Attorneys can stand to make windfall earnings from taking a patent contingency fee case, but they also run substantial risks. It is possible to expend money and energy on a case that cannot be won, resulting in a net loss for the firm. Damages may also be lower than expected, potentially not providing adequate compensation for the work performed by the attorney. Firms usually research cases before accepting them, and may take a vote among the partners to decide if the firm's resources should be dedicated to the case.

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