Part One: Controlling the Costs of Patent Litigation.
You already know that U.S. patent litigation is expensive. In fact, as the table below shows, for all but the smallest cases, the average cost per party is well into the millions, and peaks at over $5 million per party for high-stakes cases:
|Amount in Controversy||End of Discovery||Through Trial|
|$1M – $10M||$1.0M||$2.0M|
|$10M – $25M||$2.0M||$3.3M|
2013 median patent litigation costs per party (source: AIPLA)
What you may not know is that there are ways to control these costs. This post is Part One of a four-part series about controlling patent litigation costs, and discusses the effect your choice of counsel has on your litigation costs.
Base Location of IP Counsel Impacts Costs
First, the base location of your counsel is likely have a significant impact on costs, due to the different overhead costs (e.g., for salaries, office space, etc.) in different parts of the United States. As shown in the table below, the average billing rates of partners at IP firms varies around the country by almost a factor of two:
|Location of Firm||Average Partner Billing Rate|
|San Francisco Bay Area||$673|
|Boston Metro Area||$627|
|New York Metro Area||$563|
|Los Angeles Metro Area||$557|
2013 billing rates (source: AIPLA)
Therefore, for example, selecting counsel based in the “Other West” region, which includes Oregon, Arizona, Washington and Colorado (among others), can result in billing rates over 40% less than retaining counsel based in San Francisco. Furthermore, many attorneys based in “Other West” regions, including some Kolisch Hartwell attorneys, are admitted to practice in California and may have branch offices there. These attorneys can represent clients in the California federal courts, including the U.S. District Court for the Northern District of California, without any need for local counsel.
Firm Size Impacts Costs
In addition to the base location of your litigation counsel, the size of the firm you select has a big impact on costs, in at least two ways. First, large firms typically must hire professional executives and management, leading to increased overhead costs that are passed on to clients in the form of higher billing rates. Second, due to institutional pressures, attorneys at larger firms typically bill a larger fraction of their time. As shown in the right-hand column of the table below, combining these factors demonstrates that the average effective IP partner billing rate at a firm with over 150 attorneys ($624) is more than twice the average effective rate at a firm with 25 or fewer attorneys ($305):
|Attorneys in Firm||Average Partner Billing Rate||Percent of Hours Billed||Effective Billing Rate|
2013 IP partner billing rates by size of firm (data source: AIPLA)
Do you need patent counsel based in a major metropolitan area such as San Francisco, Boston or New York? Do you need a large firm with hundreds of attorneys? If the answers to these questions are “yes,” then you may be stuck with very high patent litigation costs. However, as the numbers above demonstrate, in many cases a smaller firm based in a city with lower overhead costs can offer you comparable or better representation, at half the cost or less.
Of course, everything discussed above applies not only to patent litigation, but also to other IP litigation and to intellectual property representation in general. Patent and copyright laws are exclusively federal, and most other IP laws are also federal. As a result, there is usually no need for your IP counsel to practice in the state where your company is based, and there is often no reason for your lead litigation counsel to be based in the federal district where the litigation is brought. You may be able to obtain equal or higher quality representation elsewhere, potentially with better service and dramatically reduced costs.
Kolisch Hartwell, which is based in Oregon and falls into the 11-25 attorney category, has successfully represented clients in hundreds of federal district court cases around the country, including at least 35 appearances before the U.S. Circuit Courts of Appeal and three appearances before the U.S. Supreme Court. We also represent companies of all sizes in patent and trademark prosecution matters, general intellectual property counseling, and all other IP-related matters. Learn more about our services or contact us to make a specific inquiry.