IP Lawsuits on Contingency


In the last decade, a substantial market has begun to develop for contingent fee representation (“No Win – No fee cases) in US IP litigation.

In the past, IP litigation was almost entirely performed on an hourly fee basis rather than on a contingent fee basis. That made sense because IP litigation appeared a poor candidate for contingent representation. Among other reasons, IP cases were expensive to litigate, took years to resolve, and outcomes on liability and damages were considered uncertain and unpredictable. In contrast, personal injury cases are relatively inexpensive to litigate, are adjudicated quicker, and often the liability of the defendant is not seriously disputed.

For decades, contingent fee representation has been widely used in United States civil litigation in many fields. In the typical case, an individual has been harmed — such as by medical malpractice — but lacks the financial resources to pay a lawyer on an hourly basis to litigate on his behalf. A lawyer agrees to represent the injured individual in exchange for a percentage of the eventual recovery, if any, from the wrongdoer. In this way, the lawyer shares in the litigation risk because she only receives compensation for her legal work if the client wins the case or receives a settlement.

The trend is now growing in the US following several high profile contingency successes and the more frequent transfer of IP to consolidation companies allowing them to collect past damages, that lawsuits on a contingency basis are a viable way forward if a patent owner cannot afford the litigation.

Whilst growing in popularity in the US, lawyers in many other countries including Australia, continue to conduct IP litigation was almost entirely performed on an hourly fee basis and general acceptance of the uncertainty of contingent fee litigation is more strictly avoided.

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