With patent defense playing such a crucial role in the intellectual property arena, it can be hard to tell whether legal factors are shaping business decisions or company tactics are influencing litigation strategies. In fact, patenting decisions made in the past few decades have led to a reversal of the traditional cause-and-effect relationships many companies lend credence to.
According to IPWatchdog contributor and legal scholar David Schwartz, the issue of contingent fee litigation has taken on added importance in the patent system in recent years. Traditionally, patent attorneys have billed clients at an hourly rate. This was a logical approach considering the expense, duration and unpredictable nature of IP litigation resolutions. However, landmark patent infringement cases, such as a $612.5 million settlement involving Research In Motion in 2006, caught the attention of the patent attorney community.
The contingent fee approach, which compensates counsel in a lump sum proportional to the trial outcome, has since gained notable support, according to Schwartz. However, this correlation is complicated by the fact that a number of smaller clients were inspired to defend their IP rights for the first time following a spell of lucrative, high-profile settlements in recent years. With patent monetization on the minds of more business owners, the market has been flooded with new opportunities for IP attorneys.
Schwartz's observations are being reflected in the current climate as well with large-scale cases centered in the technology sector. For a number of smaller firms, the goal is to develop a lucrative IP portfolio to attract investors or lead to an acquisition from an industry giant. According to Wired, these lucrative assets are also a primary means for investors to recoup their sunken costs in failed startups.