Patent reviews and fee options
Even though the evidence is largely anecdotal, it seems hard not to conclude that contingency fees have changed the landscape of patent litigation. Whether or not there is a correlation between the growing number of contingency fee agreements and the ever-escalating cost of patent lawsuits, there is no doubt that the defendants are increasingly seeking to contain costs. they must exhibit in order to defend their patent interests.
To limit the high cost of patent procedures, many companies are looking for formulas to replace the traditional hourly rate system. There are a number of them, including package deals, contingency fees, or reverse result fee agreements. These can be difficult to implement because they assume that the client and the law firm agree on an amount representing what the client expects to pay, with fees then being calculated as a percentage of the difference. between this amount and that - lower - of the transaction or the sentence that the lawyer will have been able to negotiate. Some studies seem to indicate that defendants are not inclined to prefer contingency fee agreements over flat rates or hourly billing, because they see litigation as a lost bet 4 . Claimants using the contingency fee system only pay their lawyer if they win, and then it is only a percentage of an amount received as a result of a settlement or judgment. The defendant who chooses a billing system other than the traditional hourly rate may succeed in reducing his overall legal costs, but unlike the plaintiff having chosen contingency fees, he cannot deduct his legal fees from the money. of a transaction or judgment. Even if the defendant dominates the lawsuit, the best result is always a net loss for him.
Beyond the various formulas for billing fees, a growing number of defendants in patent infringement lawsuits are challenging the validity of the patent in question through an administrative appeal ex parte or inter partes for re-examination before the Office of Patents and Patents. Trademarks of the United States of America (USPTO), based on prior art 5 . US federal courts have the power to stay patent proceedings pending completion of the review. The number of third-party patent reexamination requests has increased significantly since 2003, and the number of patent infringement lawsuits involving concurrent USPTO reexamination is significant and increasing.
One of the main advantages of challenging the validity of a patent by requesting a USPTO review is that the administrative costs are significantly lower than when doing so in patent litigation. . Along with the added possibility of securing a stay of proceedings, the strategic use of reconsideration has changed the landscape of patent litigation as significantly as contingency fee agreements. In fact, there appears to be a strong correlation over time between the use of contingency fee agreements, the emergence of “patent trolls” and the significant increase in third-party requests for ex parte and inter partes reviews before. the USPTO.
The emergence of performance fee agreements as an effective means of risk spreading has significantly changed the context of patent litigation, particularly in view of the emergence of the famous “patent trolls”. Doubt remains as to whether contingency fees are directly responsible for the explosion of patent litigation; US district court procedural statistics indicate that the number of patent cases has not changed significantly, as a percentage of the total number of patents, over the past two decades. And if contingency fees promote speculative and fanciful claims, the strategic use of patent reexamination by defendants and the employment of cost-cutting methods may well help level the playing field, and ultimately reduce such apparent abuses. .
Patent law reform bills have been tabled in the United States House of Representatives or Senate in each of the past three years. The enactment of the Patent Law Reform Act is likely - perhaps inevitable - but it is unlikely that it will substantially or immediately reduce the cost of patent litigation or limit the use of patent agreements. contingency fees in these disputes. In the meantime, the debate continues.
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