31 October 2012

Patent Litigation Funding: HLP3 enters the Market

Although it no longer costs anything like as much as it once did to bring a patent infringement claim it is still too much for many individual inventors and small businesses. The small claims track which I discussed in "Soon there will be a Remedy if Someone steals your Idea" on 19 Sept 2012 does not cover litigation relating to patents, registered or registered Community designs, semiconductor topographies or plant varieties.

Ideally a patentee should take out intellectual property insurance before a dispute arises and I have written lots of articles on IP insurance in this blog and elsewhere (see "IP Insurance Five Years On" 23 Oct 2010).  Unfortunately, IP insurance premiums are not cheap and many patent attorneys are sceptical as to the value of the cover.   Consequently many inventors and small businesses cannot afford to fund challenges to their patents.

Some patentees who choose not to take out patent insurance do so in the hope that some law firm or counsel will take their case on a "no win no fee" retainer.   While there are lots of lawyers who will undertake personal injuries litigation on that basis there are very few who will do intellectual property cases without an assured fee for the reasons I explained in "No Win No Fee" (NIPC website on the 14 July 2011).  There will be even fewer such cases after the Legal Aid, Sentencing and Punishment of Offenders Act 2012 takes effect. For very much the same reasons it is hard to get after-the-event insurance ("ATE") for intellectual property cases.   Premiums are high and will be irrecoverable under the new Act.

For some types of litigation, third party funding may offer a solution.   I discussed that option in "Litigation Funding for IP Claims" on 18 Sept 2012.  The latest refinement is HLP3 which was brought to my attention by Peter Rouse.   Peter, who practised IP law for many years, is now working as a consultant with US firm HLP Integration who have brought together funding from Caprica and the legal expertise of Olswang to prosecute patent infringement claims where there is a good prospect of success.   A press release dated 30 Oct 2012 explains how the scheme works:
"In return for an admission fee of £3500 HLP Integration carry out validity, infringement and financial analysis and provide a detailed report. If the results of that report are promising then the report will be sent to Patent Counsel who will carry out an assessment of the prospects of success in patent proceedings. If those prospects meet the required percentage chance of success then the case will pass to ATE insurers for a further risk assessment. If ATE insurance is approved then the patent owner can exercise an option agreement, entered into at the outset, requiring Caprica to fund the proposed litigation. From beginning to end this process is expected to take no more than 3-4 months. In summary: a modest payment per patent; a robust and thorough process of analysis, expert review and risk assessment; and an option agreement exercisable at the patent owner’s discretion for qualifying patents."
Since it is likely to cost at least as much as £3,500 for patent counsel and specialist solicitors to evaluate a claim the admission fee seems almost a bargain.   .

Should any patentee wish to discuss any of these methods of funding he or she may call me on 0161 850 0080 or send me a message through my contact form. Readers can also follow me on Facebook, Linkedin, twitter or Xing..