TGIF for the Original Patent Troll
Thank Goodness It's Friday (and Go Trolls!),
On average, it costs Niro $1 million to put on a case. He doesn't pay expenses, leaving inventors to find other sources, like patent-holding companies or private equity shops to front those costs -- usually about $2.5 million -- in exchange for a cut of the profits. He makes the money either as a straight 30-40 percent of damages, licensing fees and royalties, or a graduated arrangement, where as the firm progresses through the litigation, it gets a bigger cut. For example, for pretrial settlement Niro gets 20 percent; for a verdict at trial, 30 percent; for an appeal, 40 percent. Niro also does contingency work for a few corporations, which pay an up-front fee and a small percentage of the postsettlement riches. Contingency cases produce about 95 percent of the firm's roughly $100 million annual revenue. Niro charges his small number of hourly clients, including Alcatel, AccuMed Inc., Illinois Tool Works Inc. and Black & Decker, an hourly rate of $840. . . .
"We've lost some cases that we've really wanted to take because of the willingness of other people to pay all the expenses," says Niro. And that kind of stuff, he says, is really shady business.