Litigation Funder Launches Patent Licensing Subsidiary for Asus

Nov. 15, 2021, 10:45 AM

Litigation funder GLS Capital is backing a new business that will pursue a licensing and enforcement campaign related to cellular network patents developed by consumer electronics giant Asustek Computer Inc.

The deal marks what the litigation funding company said was the first example of a funder publicly pursuing such a campaign on behalf of patents owned by a corporation. Terms of the agreement were not publicly announced.

The Chicago-based GLS Capital is financing Celerity IP, an intellectual property management company that will pursue licenses regarding patents deemed essential to 3G, 4G and 5G cellular technologies. The patents are owned by Asus and Innovative Sonic, Ltd., a trust the company developed in 2006 to hold patent assets.

GLS Capital will have a financial interest in the outcome of the patent enforcement campaign.

GLS Capital raised $345 million in 2020 and is run by three former employees of Burford Capital, the largest litigation finance company by assets. Like other third party litigation funders, the company invests in lawsuits in exchange for a share of the awards in successful cases.

Patent disputes have been a popular draw for litigation funders since they are expensive to pursue and can generate some of the largest damages awards. Funders often receive two to three times their initial investment in successful cases—though they can lose their entire investment if a case turns into a loser.

Hedge funds have funded businesses that own and enforce patents but make no products—referred to as “non-practicing entities” in the patent litigation field.

Celerity has hired patent monetization veterans Chad Hilyard and Tim Berghuis, who will serve as Celerity IP’s CEO and president.

Hilyard was previously chief legal officer at Hilco IP Merchant Banking, which pursued licensing deals related to patents similar to those in the Asus portfolio and obtained a $300-plus million damages verdict against Apple Inc. in August.

Berghuis had been chief licensing officer at InterDigital, where he also led a licensing program for a cellular standards-essential patent portfolio. The company was earning $300 million in licensing revenue annually, according to a Celerity statement.

“The Celerity team is best-in-class and we are very pleased that they are the exclusive agent for the Portfolio,” Asus general counsel Vincent Hong said in a statement.

Asus and Innovative Sonic will continue to own the patent portfolio while Celerity pursues the licensing and enforcement campaign, Celerity said.

Adam Gill, a GLS founder, said the deal was the first of its kind to be announced publicly by a funder. It’s an indication the litigation finance industry continues to mature, he said. U.S. funders have attracted more than $11 billion in capital, according to an industry survey.

“As time goes on, people will use different structures and you’ll see more variation,” Gill said. “And I do think that a company partnering with a known, leading litigation funder does reflect broader acceptance of this market.”

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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