How To Get a 19 % Return On Your Investment

Jonathan Stroud is General Counsel at Unified Patents, an organization adverse to litigation-funded entities. In a guest post about patent-assertion financing in PatentlyO, he discusses two April 2021 Federal District of Delaware orders requiring parties to litigation to disclose third-party litigation funding and notes that Delaware is a hub for patent infringement litigation. The orders further require disclosing whether third-party approval is necessary for legal strategy decisions and settlement conditions. “It may help judges prevent misrepresentations about David v. Goliath narratives from being used to sway juries, writes Stroud, “where it might in fact be more like large private equity funders versus large operating companies. In one recurrent example, a major funder has a habit of acquiring patents from companies in bankruptcy and then naming the wholly controlled LLC subsidiaries after the original company, at least suggesting to any jury a connection that no longer exists.” The orders have already revealed that a single company, which pitches a 15-19% ROI annually to potential investors, backed over 4,500 patent suits in the past decade. Part of the company’s strategy was the recruitment of private citizens to sign legal documents as patent “owners,” offering to generate “passive income” as part of a litigation-funded investment.