Bloomberg Law
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Law
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

ANALYSIS: Why Patent Litigation Is a Natural Fit for Financing

Jan. 14, 2022, 10:00 AM

Litigation finance is poised for another year of growth and innovation, particularly in the area of patent litigation. The unique risk-reward characteristics of patent cases have propelled an interest in patent litigation investment.

Results from Bloomberg Law’s 2021 Litigation Finance Survey confirm a steady growth in litigation funding for patent cases. The number of lawyers that have obtained funding in patent law has increased from 19% in 2020 to 24% in 2021, making this the second most active practice area in litigation financing after commercial litigation.

Almost alone among practice areas listed in the survey, the patent field saw more respondents who have actually obtained funding than than those who said they want to receive funding but have not yet done so.

This disparity can be attributed to the high-risk, high-reward nature of patent litigation, and indicates that patent law is already a well-funded area. Investment firms have their own internal patent specialists, which further demonstrates a commitment to this specialized and complex area of law.

High patent damages awarded in 2021—such as the $2.18 billion finding in favor of VLSI against Intel, the second-largest patent verdict ever—make such litigation funding opportunities very attractive, illustrating the growth of investment.

In 2022, we will likely see not only an increase in patent litigation funding but an expansion to funding patenting licensing, as litigation investment firms seek to diversify their investment portfolios with stakes in licensing entities. Funder GLS Capital, for example, is backing a new business that will pursue a licensing and enforcement campaign related to cellular network patents deemed essential to 3G, 4G, and 5G cellular technologies.

The popularity of patent funding investment is likely to increase and diversify in 2022. As funders develop specialized due diligence skills, the likelihood of sourcing successful patent ventures grows even stronger.

Bloomberg Law subscribers can find related content on our Patents and Trade Secrets Practice Center resource.

If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content, or click here to view the web version of this article.