Forming a LLC to litigate patent infringement with Law firm

[Mikebuzz]

Hello all , I have a Patent on Ecigs ( electronic cigarettes ) issuing any day now, this patent covers a fairly large sector of the current market ( variable voltage is the main claim ) I am talking to my current patent lawyer about litigation .

We have discussed forming an LLC with him another partner ( specializes in litigation ) and myself , they would litigate violators of the patent at no cost to me up front in exchange for part of the proceeds from litigation and part owner ship in the patent WHEN it sells IF it sells.

My question is this , what would you think is a fair split in a vase like this ? also if anybody is interested in a deal like this I am open to any ideas / offers.

I hope this last part is OK moderator , if not please edit it.

thank you
Mike Buzz

[NJ Patent1]

Well, I don't know what jurisdiction you are in, but IMO no need for LLC, etc.  To what end?  Lawyer takes it on contingency, but somebody has to pay costs, although such can be advanced.  25% to 30% (plus costs) would be appropriate and in some jurisdictions common continecy fee , but may be capped in the cognizant jurisdiction. 

[Mikebuzz]

Well, I don't know what jurisdiction you are in, but IMO no need for LLC, etc.  To what end?  Lawyer takes it on contingency, but somebody has to pay costs, although such can be advanced.  25% to 30% (plus costs) would be appropriate and in some jurisdictions common continecy fee , but may be capped in the cognizant jurisdiction.

Thanks for replying , I am in California , the LLC was suggested by the attorneys I mentioned , I have never done anything like this before so it is very new to me.
They will pay all costs to litigate.
Have you heard of arrangements like this before ?

Again thank you for answering

[JimIvey]

Did the firm match you up with an investor that will pay the costs?  Few firms, if any, will pay the costs when litigating on contingency.  If you're matched with an investor, a corporation (e.g., LLC) might be a good way to divide up shares of ownership between you and the investor.

Regards.

[MLM]

I get the impression that the two lawyers are the investors, thus the LLC is to insulate them as investors from their firm.

[Mikebuzz]

The Lawyers are acting as investors in this case , I did find a firm that does this with outside investors General PAtent Corp. anybody heard of them ?

[engineerprose]

In any case, whatever course of action you take, be aware that patent litigation is extremely ticklish business. Every time you assert a patent, you risk having the patent invalidated. You stand to lose the patent, but the lawyers only stand to lose the time they've put into litigating the case. Usually, if anyone is interested in even talking to you about such a joint venture, it means they think the chances of recovering more than the costs of litigation are high, and therefore that your patent is significantly more valuable than the costs of litigating. So your losses are potentially significantly higher than theirs and as such they may be inclined to litigate more recklessly than you would be. I would recommend, if at all possible, to find investors who will give you money to pay the lawyers to litigate, rather than partnering with lawyers.

[NJ Patent1]

JinIvey is in a better position than I to opine on the RPC in Cali.  I never heard of that outfit, but you mentioned "outside investors".  IMO that's different.  Sort of like a "troll"?  I and a hypothetical partner form an entity with you.  Would we have a "controlling interest" in the entity and hence in outcome of the litigation, "tempting" us law partners to put our pecuniary interests (time to fold b4 we loose) above your (or those of the entity's we control) interests?  In a sense we (partners) are our own client? 

[bleedingpen]

Ehh, the split is usually more like 50-50 in patent litigation.  This ain't no slip and fall stuff. 

Anyways, I found a published application that looks like it belongs to you and it does not look even close to issuing.....

[Mikebuzz]

THanks all , I manufacture this product , I am NOT a troll ( I have 11 patents so I am not new to patents and protecting them ) the application is USPTO 12985988  we have been informed by the examiner that it is issuing very soon ,. anyhow I need to protect this IP it has become a big part of the E-Cig market ( look at the growth )
If you really want to see that I am not a troll look up Mike Buzzetti on USPTO patent search.

anyhow I do appreciate the replies and thoughts you all have posted , I am new to this type of deal and wanted some feedback.

Sorry If I came off harsh , I got a LOT of flak in the Ecig world for even applying for a patent , they said I should have GIVEN it to ecigs in general and not applied.

[NJ Patent1]

Mike:  IMO you did not come across harsh, and do take care with too many details here, OK? For your own best interests. I was not implying that YOU are a "troll", rather that "investor outfit" lawyers mentioned / suggested to you may be.  NPE / troll or not, there is today no issue with having "investors" bankroll a suit.  My comments were directed to your lawyers situation.  There is nothing wrong (in NY & NJ) with a lawyer having a financial interest in a client, as long as it is not a controlling interest.  Why?  A lawyer in NY & NJ (and I bet CA too) is supposed to exercise independent legal judgment in pursuit of best interesets of the client (you or the business entity).  If I have a controlling interest and litigation isn't going so well, I might be tempted to suggest we settle - so I get some $$$, rather than fight on and realize zilch.  Now a settlement might indeed be in client's "best interests".  But there is this cloud, an appearance that I might have put my interests above client's.  If your lawyers are cool with the business entity route on ethical grounds, it might be better than using an "angel" - AFIK they have no code of ethics for you to fall back on.

bleeding:  50-50?  Really?  Admit never done contingency patent litigation.  My comment re: 30% was based on contingencies in state law tort ("slip-and-fall") actions.  Hmmm, maybe I need to rethink.         

[MYK]

Mike, as interesting as it is to be able to look up specifics, you really should delete the identifying information from your post.  A web search by the opposing parties could turn this up.  It can't help you and who knows, they might be able to find a way to use it to hurt you.