Can you file a patent lawsuit without a lot of money?
It seems fashionably controversial nowadays to say patents are worthless. Myths abound on the web. Some say patents are too expensive to obtain. Actually, patents can be surprisingly affordable. Even if you get a patent, they say, it will take too much money to enforce them. Patent litigation can be prohibitively expensive for smaller companies. Is there a solution, however, for startups and small business owners to enforce patents that do not require millions of dollars? This is where patent litigation funding can be helpful.
Nothing in this post constitutes financial advice or legal advice.
What are the general requirements for securing patent litigation funding?
Each litigation funder will have its own due diligence checklist. Nonetheless, general commonalities exist across all litigation financing requirements. They boil down to at least three requirements:
- Strong infringement merits: Ideally, your patent claims should provide you with a strong case of literal infringement against accused products. Claim charts can help show this. Otherwise, it may be an uphill battle to convince a litigation funder to take your case based primarily on the doctrine of equivalents (DOE). DOE should be a fallback position, not your primary infringement argument.
- Potentially large recovery: Litigation funders generally want to see a high damages amount to pursue. That could mean a few large companies with very large sales numbers, or a decent number of mid-size companies with infringing sales.
- No glaring defects or problems: You can’t predict everything that will happen in a patent lawsuit, but plaintiff litigators and funders all want to avoid any surprises that could or should have been uncovered earlier in the case. Is there a key prior art reference that will substantially alter infringement or invalidity contentions?
Patent Litigation Funding Checklist
Here are some helpful questions that you will want to address before approaching litigation funders.
Question 1: Which claims are infringed upon?
There’s nothing wrong with you taking the first stab at preparing claim charts. Ultimately, you will want to confer with a patent attorney with infringement litigation experience to refine those claim charts. They may be able to point out weaknesses, whether real or perceived, that you can address by modifying your infringement contentions. Ideally, your claim charts should show literal infringement with each asserted claim and accused product.
Question 2: Who are the potential defendants?
The identities of the potential defendants will matter. Are they large companies with deep pockets to litigate a protracted patent lawsuit? Will you also pursue midsize companies who might be more inclined to pay a decent sum to settle sooner?
Question 3: What is the value of the accused products sold?
This question seeks to determine how much is at stake. A royalty base report by a financial damages expert may help to establish a baseline to which a reasonable royalty may be applied.
Question 4: Has a prior art search been conducted to look for new references?
When it comes to invalidating a patent, most litigators recognize that new prior art references which were not previously considered by the USPTO will support a more convincing invalidity argument. A pre-litigation prior art search can help uncover new prior art references that were not of record during the prosecution of the patent. Locating new prior art upfront will avoid surprises, and most patent litigators will want this due diligence step completed before taking on a patent plaintiff’s case.
Recognize that defendants will likely file an Inter Partes Review with the USPTO to challenge the validity of your patent. Therefore, searching the prior art before filing the infringement lawsuit will better equip your team to defend the IPR.
How can a patent attorney help you form the right litigation team?
A winning patent strategy involves many moving parts. You need the right patent litigators. Unless they are willing to take your case on full contingency, the patent litigation firm will need funding. Which litigation funder will be the best fit for your case? Some funders may require that you use their preferred litigation law firms.
An experienced patent attorney can help you form the right team and explore financing options. You can take advantage of the relationships built by a seasoned patent attorney even if they will not be the one litigating your case.
Moreover, patent attorneys with infringement litigation experience can help you with claim construction that balances infringement and validity. Go too broad and you risk invalidity. Go too narrow and you risk noninfringement. Experienced patent litigators try to strike the sweet spot.
Patent agents can’t help you because they’ve never litigated. Trademark attorneys can’t help because they don’t prosecute or litigate patents. You need a patent attorney with prior infringement experience who can steer you in the right direction. Our firm can serve as a useful guide to building and executing your patent enforcement strategy.
Need to fund a patent infringement lawsuit?
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