July 27, 2020

Basics of Patent Litigation Funding

Documentation Claimants and Attorneys Should Provide Funders

Because patent holders may face large, well-capitalized defendants who have unlimited resources to fight litigations claims, patent litigants have historically been at the forefront of pursuing third-party litigation financing to prosecute their cases.  As the litigation financing industry has grown, patent litigation continues to be heavily sought after by individual claimants and law firms, and funders such as Curiam will often see hundreds of potential cases every year.  In order to help funders evaluate your patent litigation matter, Curiam is publishing a series of articles detailing the information that claimants and/or attorneys should provide to the funders.  Here, we provide a high-level overview of the basic information that funders expect to receive.  

1. Patents and File Histories

In addition to the patents that you plan to assert in the litigation, you should also provide file histories for those patents and other family members to the extent they are not publicly available through pair.  To the extent that the patents to be asserted are continuations-in-part of earlier applications, it is important that you provide some analysis regarding priority dates and expiration dates, as these can sometimes vary between different patents in the same family.

2. Infringement Charts

For at least one exemplary claim of each patent to be asserted, you should provide a chart detailing how each of the products accused of infringement meets each limitation of the claim.  These charts should be as detailed as possible given the publicly available information.  If there are certain limitations that cannot be proved prior to obtaining discovery, you should provide clear reasoning why you believe that the accused products will ultimately prove to meet that limitation.

3. Validity Analysis

You should provide funders with an analysis of why your patents will survive validity under sections 101, 102, 103, and 112.  Claimants and attorneys are generally proactive with their analysis of 101 issues (and to a lesser extent potential 112 issues), but validity analysis under sections 102 and 103 is often lacking in presentations to funders.  For a variety of reasons, attorneys simply do not perform any type of prior art analysis in their pre-filing investigation (beyond what was presented in the prosecution history), even though the biggest threat to a successful litigation campaign is arguably invalidation before the PTAB.  As such, it is highly beneficial for claimants or attorneys to perform an independent prior art search before presenting your case to a funder.  This allows you to demonstrate to a funder that you understand the state and scope of the prior art that might be used in potential IPR challenges and have considered strategies for dealing with potentially problematic art.

4. Damages Analysis

For each defendant, you should provide the expected amount of damages upon a victory in trial and the methodologies used in obtaining your damages numbers.  It is not necessary to obtain an expert to analyze the damages (attorney analysis is enough), but the damages must be supportable under Federal Circuit case law and must be realistic (e.g., you probably do not have a billion-dollar case).

5. Budget through Trial

You should provide a budget that accurately reflects the capital requirements for legal fees and disbursements from the close of the funding agreement through trial.  It is not in your interest to present a budget that is either too high or too low. 

6. Venue Analysis

You should provide thoughts on proposed venues to bring the litigation and justifications for why those venues would be appropriate.  Keep in mind that funders may not always agree with the choice of venue, that not every case is appropriate to be brought in a rocket docket (e.g., Western District of Texas), and that analysis of the technical risks of the case factor into venue considerations.   

Curiam Capital
Anup Misra

Anup Misra

Director

Anup Misra primarily assists with the underwriting of financing opportunities related to intellectual property litigation. He also works on business development and the monitoring of ongoing litigation for Curiam’s investments. Learn More