What does patent litigation cost – and who bears the risk?

The short answer: Patent litigation involves court fees that depend on the amount in dispute, plus fees for attorneys, patent attorneys, experts and translations. The losing party generally also has to reimburse costs of the other side, and an attack on the patent's validity is common. With success-based litigation funding, the patent holder bears neither upfront costs nor the risk of losing.

Why patent litigation is expensive

A patent infringement case is technically and legally demanding. It requires specialists on both sides: lawyers who run the proceedings, and patent attorneys and engineers who understand and prove the technology. On top of that, defendants rarely just defend – they frequently attack the patent itself. That drives effort and cost.

The key point: costs arise upfront and on an ongoing basis, while any recovery only comes at the end. This timing gap is exactly what turns patent litigation into a problem for many patent holders.

The cost components at a glance

Court fees

In Germany, court fees are calculated on the basis of the amount in dispute – the economic interest at stake. In patent disputes involving relevant revenues, the amount in dispute is correspondingly high, and so are the fees.

Attorneys and patent attorneys

In German infringement proceedings, attorneys-at-law and patent attorneys typically work together. Their fees depend, among other things, on the amount in dispute and the effort the case requires. The effort for briefs, oral hearings and the technical argument is considerable.

Experts and technical analysis

Infringement has to be proven on the actual product: product analyses, claim charts, test purchases where needed, and expert reports. This technical groundwork is the basis of every action – and a cost block of its own.

Translations

Where patents, evidence or parties are international, translation costs may be added.

Adverse costs if you lose

Whoever loses patent litigation generally also has to reimburse costs of the other side. The risk of patent litigation therefore includes not only your own expenses but also the other side’s costs.

Attacks on validity

Defendants often respond to an infringement action by attacking the patent itself. Defending the patent comes with its own effort, its own attorneys’ costs and its own cost risk.

Why this holds back SMEs and inventors

For a large corporation, patent litigation is a budget line. For a mid-sized company, a research institution or an individual inventor, it is often an existential risk: substantial outlays over the entire duration of the proceedings, plus the possibility of having to bear the other side’s costs as well.

The result: many valid claims are never asserted. Infringers factor this in – especially when they are much larger than the patent holder. The balance of power, not the quality of the patent, then decides whether a right is enforced.

How success-based funding shifts the risk

Litigation funding addresses exactly this gap. A specialized funder covers the costs of the proceedings – attorneys, court and expert costs – as well as the adverse-cost risk. In return, the funder shares in the proceeds; market-standard is 30–40 % of the proceeds, depending on the likelihood of success, the damages and the strength of the portfolio. If the case is lost, the funder bears the costs.

For the patent holder, this means 0 € upfront and no cost risk. The litigation costs you nothing – only the success is shared.

TYR’s role

TYR assesses, prepares, funds and coordinates:

• Assess: In the free initial analysis and the subsequent in-depth analysis, TYR examines the case technically and economically – claim charts, validity search, formal risks and damages potential. The legal assessment of infringement and validity is provided by the law firms instructed.
• Prepare: The case is prepared as an investment case for funders – claims, evidence, damages potential and defendant profile.
• Fund: TYR presents the case to suitable litigation funders from its network; if desired, via an SPV.
• Coordinate: If it comes to litigation, TYR assembles the right team of patent and litigation attorneys on request and coordinates it.

As a guide, it takes around 25 weeks from analysis to filing the action. You will usually receive an initial assessment of the funding potential within two weeks – free of charge. For more on how the model works, read How does patent litigation funding work? and see our litigation funding page.

The legal assessment of an individual case and representation in court are provided by specialized law firms and patent attorneys, which TYR coordinates on request.

This article is for general information and is not legal advice.

Litigation funding