Patent Funders: So Much More Patent Litigation Financing

Patent Funders: So Much More Patent Litigation Financing

View Session Speakers

Today many companies make the business decision to infringe patented technology instead of paying a royalty to license it—so called efficient infringement. The calculation is that it will ultimately be less expensive to ignore the patent rights of innovations than to take a license in an arm’s length negotiation. Over the last 15 years that calculus has largely proven correct, with changes to numerous laws and the introduction of additional administrative processes all conspiring to make it easier to challenge issued patents. This means that litigation is often the only way for an innovator to protect valuable intellectual property and to stop infringement. Unfortunately, lacking leverage and financial resources, many patent owners cannot stop infringement, in some instances even after a jury trial.

Finance has increasingly entered the patent litigation space over the last several years, and more recently insurance too, with a great deal of money almost flooding the marketplace now. This money and its creative deployment strategies are starting to equalize the playing field, which will likely continue for now as damage verdicts are high and the Federal Circuit is showing willingness to accept enhancement multiples to punish willful infringement. Of course, the deals and variety of vehicles being used are highly structured and increasingly complex. For that reason, today it is probably better to think of “patent funders” as dealmakers, or perhaps financiers. Simply funding patent litigation is only a piece of what they are doing.

CLE Materials

Patent Litigation Financing: Fighting Efficient Infringement with Funding