Patents: Lawyers trading their work for a percentage


I’m in some unfamiliar territory right now. I applied for a patent a couple years ago and am going to prosecute it with my lawyer soon. And I’m applying for another patent with the same lawyer. He has offered to accept a part of the profits of the product in exchange for doing the current work and some future work (filing the new patent and prosecuting both patents). He also wants a percentage of ownership in both patents as a contingency plan. I already know he will not accept a percentage of the new company I’m setting up for this product – he will only accept a percentage of the profits from the product, and a percentage of the patent.

I’m aware that this kind of exchange is a bit thorny, having read some articles on joint patent ownership. I am attempting to cover all the potentially difficult issues in my contract.

My big question right now is how to determine the percentage of profits to give my lawyer, and the percentage of the patent to give him. A different, objective lawyer has valued my lawyer’s work at 30-40k. And I currently value my idea at 500k.

Has anyone here done this before? Is there some kind of formula I can use as a guide? Also, I need to figure out at what stage I’d be giving him what percent – for instance – 1% of net vs 1% of gross?

I think alot would have to do with what you are making out of it. If you are getting 3% royalties, would you really want to give him 1%? If you are manufacturing it, etc. on your own, then maybe that is more realistic.

I’ve never heard of an attorney wanting a “piece of the action” when it comes to intellectual property. It’s not like a personal injury issues where you can recoup damages, and he get a percent. This smells funny.

Suppose you create the next great widget. If it takes off, do you really feel that some lawyer deserves a percentage of your profits merely for writing up your patent application and maybe defending it if, and I say if, you ever have to go through the process of litigation?

Pay your fee to him, retain your rights and assignments, and earn your money the old fashion way. From the sound of your post, it appears the assignment will go to you and you plan on producing the product, right? If you developed this patentable product as an employee, then the company, not you, owns the patent and this is all moot. But it sounds as though you’re the inventor and producer.

I hold eight patents, have prosecuted two, am in the middle of a third litigation, so I can speak with some level of background knowledge on the subject.

If its successful, you’ll be dollars ahead, instead of trying to scrimp up front.

Just my $.02 worth.

Actually, I’ve read several articles on lawyers accepting a percentage of a patent in exchange for their work. It is a little thorny, and the articles point out some issues to keep in mind. They suggest seeking other counsel – I will have another attorney draw up the forms and advise me on these issues. So hopefully I’ll be protected.

So now, what I really need to do is figure out what percent the lawyer gets of the profits. I don’t think this is the same as royalty, but it might be a similar process to figure the number out.

The reason I’m doing this deal with my lawyer is I don’t actually have the cash for the patent now.

indirect experience had a lawyer taking an initial percentage and then changing it to another percentage. forget if up or down. i thought the guy got too much. probably went up which makes no sense to me. but at least you know you can offer higher cut first to cover legal costs you couldnt pay. then lower that afterward which is what lawyer gets for his risk (right. risk.)

Hmmm. Yes, best to be very careful in this situation. How did you arrive at the percentages to give the lawyer in the first place?

see pm.

utility or design patent? makes a big difference. I assume you mean utility. I think “prosecute” can mean just to get the application through the patent office, whether it becomes a patent or not. “in litigation” means in litigation.

I think one will be a design patent and the other a utility patent. At this point, I think we’ve decided to just pay for this ourselves. it seems way too complicated otherwise…

There are tons of inventors groups across the country that can advise you on this. find one in our area. looking back at the posts, i’m still confused. Acala, when you say litigate, do you mean someone is challenging your patent in court? this can be INCREDIBLY expensive and if your lawyer is willing to do this for a piece of the action I say go for it. It is not unknown for unscrupulous people to file “extortion” lawsuits and companies to settle to avoid the cost of defending their patents.

But I’m thinking you are referring to the prosecution of a patent application in the patent office.

Hey IDSA, i’ve seen tons of posts on here like this - you oughtta publish a pamphlet or something.

There are tons of inventors groups across the country that can advise you on this

…and they’re happy to rip you off too!

no no no, I mean like clubs of actual inventors who share info and provide resources for free or a small membership dues. I did a 10 second search:

oh yeah, and depending on the invention, writing a solid set of the broadest possible claims is incredibly valuable, not to be done by an amateur. not to mention navigating the application process itself. that’s not to say that it cannot be done by an amateur or poorly skilled attny, but in some cases hundreds of thousands of dollars, or millions, can hang on a single word if it goes to litigation. that’s being dramatic but it does happen. don’t mess around.

and be sure your atty is very experienced w design patents if you’re doing one of those b/c there are differences from utility patents that not all atty’s appreciate. that said, usually less is riding on a design patent.

and one more thing, couldn’t you negotiate something with your atty wherein he gets a cut of any up front fee you recieve and less of a cut of ongoing royalties? or something to that effect that would ease your nervousness about him getting too big a chunk of your winfall? ain’t love grand? :wink:

i personally wouldnt get a design patent. or i’d do it myself. Core has or had an article on some design patent legal case. worth reading about.

yeah, design patents are not as valuable, seem to be used mainly as extra leverage when asking someone to “cease and desist” knocking you off. my paragraph above starting with “oh yeah” refers to utility patents, which is what is usually meant when someone says “patent”. always ask to be sure.

our first patent was a design patent (we thought it would be utility but it sort of migrated to design). the second one seems like it will be a utility patent.

we’ve decided to just go ahead and pay our lawyer to help us make a necessary amendment to the first patent now – rather than making a deal with him. we have filed for a provisional patent on the second one… and will let that one lie for a while as we just don’t have the cash flow and energy to do it now.

The utility patent application “migrating” to design sounds shady to me. If the invention had potential for a utility patent, what’s the point of a design patent? They are completely different things. They are both patents in the way that, say, the specs of a nuclear reactor and the shape of a vase are both “design”. Is your attorney saying We got the patent and oh by the way it’s a design patent? If so, run.

oh and ask your lawyer what is the difference between “new matter” in a design patent appl. vs. in a utility patent appl. If he can’t give you an answer pretty quick, consider getting a new lawyer.