Despite looming economic troubles, litigation funding for patent cases isn’t going anywhere, and is poised to increase, results from a Bloomberg Law survey show.
This year’s Litigation Finance Survey confirms that litigation funding for patent cases is holding steady: The percentage of lawyers surveyed who obtained funding in patent law remains the same as last year (23%). Patent litigation was an area quick to embrace litigation funding, and financing continues to be in high demand in this practice area to help absorb the expense and risk inherent in patent litigation.
In 2022—consistent with the results from Bloomberg Law’s 2021 Litigation Finance Survey—patent law remains the second most active area in litigation financing after commercial litigation. In contrast to last year, the percentage of funders that have provided funding has increased: 68% of funders reported providing financing in patent law this year, up from 46% in 2021.
Also encouraging for funders: This year, the percentage of lawyer respondents interested in patent litigation funding (30%) is much higher than it was in 2020 (11%) and 2021 (4%).
High costs and potentially much higher pay-outs align the interest of funders and lawyers in this practice area. With the global economy facing a recession, the litigation finance industry—particularly in the area of patent law—is well-positioned to maintain its momentum as a growing industry.
The high-risk, high-reward nature of patent litigation makes this an area of particular interest for funders facing a recession. Economic downturns actually increase patent litigation and licensing efforts as companies seek new revenue streams to compensate for decreased profits and sales. If law firms experience a cash crunch in the upcoming months, litigation finance will be an even more attractive option to bridge the cash gap, fueling the popularity of patent funding investment in 2023.
Bloomberg Law subscribers can find related content on our Patents and Trade Secrets Practice Center resource and In Focus: Litigation Finance page.
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