Law Firm Funding for Patent Litigation

Patent lawyers practice on the cutting edge of innovation, helping to obtain, challenge, and defend patents. But patent work is fraught with specificity, requiring attorneys to pass a special examination before they may represent clients in the United States Patent and Trademark Office (USPTO). Just to qualify to take this examination, attorneys must be knowledgeable about the technology or subject matter of the patents they work on.

The laws, rules, and procedures that govern this practice area are detailed and vary greatly from civil procedural rules. Disputes rising to the level of litigation tend to be both lengthy and expensive.

Fortunately, law firm funding can help offset the expenses incurred by firms that handle patent litigation.

The Legal Landscape of a Patent Law Practice

Patents encourage invention by giving owners exclusive rights to their creations for a specified period of time. The core sources of patent law are largely federal:

    • The intellectual property clause of the U.S.[HK1] Constitution (U.S. Const. art. I, § 8, cl. 8);
    • The U.S. Patent Act, 35 U.S.C. § 1 et seq.; and
    • The Rules of Practice in Patent Cases, 37 C.F.R. § 1 et seq.

However, many states have enacted laws that may impact patent infringement lawsuits as well. Attorneys practicing in this area must, therefore, stay abreast of numerous sources of law.

Law firms with a patent law practice must also navigate many agencies and forums, including the USPTO, the Patent Trial and Appeal Board, the International Trade Commission, and various tribunals in the federal court system.

Characteristics of Patent Law Cases

Patent law cases share many characteristics with other complex litigation:

      • Significant disclosure and discovery;
      • Necessary economic and scientific expert witnesses;
      • Potentially large amounts of damages; and
      • Extensive settlement negotiations and trials.

These traits tend to result in increased litigation costs for law firms practicing in this area. And not all firms have the working capital to carry costs like these for pending cases. Fortunately, law firm funding can provide capital in relatively short order to firms that qualify.

Law Firm Funding for Patent Litigation

Patent litigation is an exciting practice area that impacts governmental entities, individual businesses, and even entire markets. Attorneys who possess the desire and significant qualifications to work in this area should not be discouraged by inadequate funding.

Patent attorneys can apply for law firm funding by pledging one or more cases as collateral. Perhaps the most exciting characteristic of this financing mechanism is that it is non-recourse, so if the firm is unsuccessful in the pledged cases, repayment is not required.

In the application process, the funding company conducts a due diligence review of the collateralized cases, considering factors like these:

    • The nature of the dispute;
    • The relative merit of the law firm’s legal position;
    • The firm’s track record in similar cases;
    • The procedural posture of the case; and
    • Relevant case precedent, governing laws, and rules.
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