The recent LF Dealmakers forum, a major event for litigation finance professionals, provided some valuable takeaways for IP lawyers and their clients, further cementing litigation funding’s relevance in today’s IP litigation field. The forum tackled important subjects and opened discussions on an array of topics crucial to IP practitioners.
The significance of the rapidly growing litigation insurance market to the IP ecosystem was highlighted as one of their essential takeaways. Judgment preservation insurance, particularly, has seen an increased usage and availability. This insurance type safeguards a significant percentage of any verdicts secured by successful patent plaintiffs through their enforcement efforts. It has become increasingly prevalent because risks can be evaluated more comfortably post-judgment than at the start of a patent case. However, other kinds of insurance products are gaining traction too. This includes insurances that benefit funders or claimants pursuing patent cases, such as insuring a diversified basket of cases at various development stages, or insuring a potential return from licensing or enforcing patents over an extended period to attract necessary funding.
While the forum accentuated the importance of insurance, it also pointed out the omission of discussions around existing investment performance by litigation funders, specifically concerning backed patent litigation campaigns. The diligence required to decide to fund a patent case is quite extensive; hence, funded patent cases are well-vetted. However, the vast potential to lose a patent case compared to the narrow path to victory diminishes the pre-suit diligence’s value over time.
Finally, the challenges funders face while trying to handicap patent cases were also addressed. A significant hurdle is “duration” – the amount of time an investment takes to generate a return. Although advantageous for litigators and funded clients, a long duration could incur huge opportunity costs and other related costs for funders. Despite these difficulties, funders are increasingly incorporating duration risks into their funding models and agreements.
LF Dealmakers continues to reflect the growing sophistication and development of litigation finance, capturing the interest of many talented lawyers and financial professionals. As the industry continues to evolve amidst these discussions, professionals within the IP community keenly anticipate the next meeting.
More on this topic can be read here.