Patent Litigation Funding Info Central

Basics of Patent Litigation Funding
By Ken Marlborough

Patent litigation funding is a critical tool in patent enforcement when litigation is required to enforce the patent. Patents protect new innovative and useful inventions made by researchers and inventors. Patents are exclusive legal rights given to inventors by the government for a fixed duration of time, allowing them to disclose their inventions to the general public, with certain regulations and details about the device or invention made. Patent infringement is not a crime. The only remedy that patent owners have is to pursue patent infringers via civil litigation, and since patent litigation is very expensive, patent litigation funding from a patent litigation funding company is often required.

Patents help inventors safeguard their creations and make it illegal for anybody else to make copies of the original inventions either as a whole or in parts. Every invention and development made should be patented. There are patent attorneys who help the inventors to gain ownership rights to their products. And there are patent litigators and patent litigation law firms who help patent owners enforce their patents through patent infringement litigation.

The United States patent and trademark office issues patents. Patent examiners carefully analyze patent applications and ensure that every patent represents a real invention. When a patent owner claims infringement of his or her patent, the alleged patent infringer will often counter the patent infringement litigation by challenging the validity of the patent.

Patent litigation funding companies deal with litigation in which the patent owner claims that his or her patented invention has been copied or imitated. While a patent owner may be able to find an attorney or law firm to launch patent infringement litigation against the alleged infringer, the patent owner will need to find funding for the expenses related to the litigation such as filing fees, expert witnesses, trial demonstratives, research, travel expenses and court reporters. The patent litigation funding company will thoroughly examine the patent owner’s litigation to determine if it is a viable patent infringement claim for which the company can provide funding.

Patent litigation funding companies will either pay a lump sum to the patent owner, or approve the patent owner for a funding amount, and then release funds as needed as the litigation progresses and expenses arise. Patent litigation funding is contingent, non-recourse funding. It is “contingent” because repayment of the funding is “contingent” on the outcome of the patent litigation; repayment of the funding is only made if the patent litigation has a successful outcome – an award at trail or an out-of-court settlement. Patent litigation funding is “non-recourse” because the patent litigation funding company has no “recourse” if the plaintiff loses his or her patent infringement litigation. The patent litigation funding company writes off the funding as a loss, and the plaintiff owes nothing!

Should the plaintiff be successful in his or her patent litigation, and either win the case at trial and receive an award, or reach an out-of-court settlement with the patent infringement defendant, the patent litigation funding company is re-paid the funding it advanced to the plaintiff, plus charges for use of the funds, out of the proceeds of the award or settlement when the plaintiff’s attorney or law firm is also paid their fees. Once the attorneys are paid, and the patent litigation funding company is paid, and any other lien holders are paid, the balance is paid to the plaintiff.