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A growing number of law firms are willing to share the risk of patent litigation by taking cases on a contingency fee basis.
Although these may represent only a tiny fraction of cases, more firms are trying to formulate alternative fees in patent suits.
It is a trend, and I think we'll see more of it, said Bruce Sunstein, who chairs the patent practice group at Bromberg & Sunstein in Boston.
The number of patent cases has exploded recently, doubling over the past decade, especially in the software and pharmaceutical fields, fueled by huge verdicts like the $600 million BlackBerry case.
But patent litigation can be expensive and risky, preventing many companies from asserting their claims.
An average patent case will cost between $3 million and $10 million, and take two to three years to litigate.
Individual patent holders and small companies with no other assets than their patent portfolios normally wouldn't stand a chance against Microsoft or other giants.
But contingent fee arrangements can allow smaller companies to stay in the ring longer against an opponent, said James Foster, a senior patent litigator at Wolf Greenfield in Boston.
A lot of companies can't afford to pay $2 million chasing a recovery they may not get. The really big companies can pay the full freight [of hourly fees], but companies that are not quite as well- financed might find [contingent fees] attractive, he said.
Foster, who recently spoke on a panel about the subject, has experimented with contingent fees in a handful of patent cases and is happy with the results, noting a recent win.
Our client was small and the defendant was huge. The client was worried the defendant would outspend them and cause us to settle for less than the case was worth, so we worked out a deal. They only paid 70 percent of our normal hourly rate and if there was a favorable event, we would get more money, he said.
The case settled after three months, the client was able to go up against a defendant with bigger resources, and the law firm earned a substantial bonus that exceeded what it would have...