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Concerns About the Economy May Not Affect Litigation Financing for Patent Cases

The high cost of patent litigation can have an impact on parties' enforcement and defense strategies by making settlements more cost-efficient than battling out the claims in a courtroom and risking a damages award. High litigation costs can also limit the legal strategies available to defendants as the high cost of patent defenses may quickly outpace settlement and licensing demands. On the enforcement side, small businesses and individuals may also think twice about pursuing their legal claims due to limited resources which can ultimately disincentivize companies from investing in research and development.  

Litigation financing has changed patent litigation by increasing access to the court system for patent holders. Litigation financing spreads the risk of a lawsuit across multiple parties, allowing patent holders to pursue the enforcement of their intellectual property while sharing the risk and reward of litigation. Plaintiffs can turn to litigation funders to fund extensive fact discovery, hire the appropriate expert witnesses, and respond to early motions and IPR practices, enabling plaintiffs to build stronger cases and adopt more aggressive legal strategies. Fortunately, the forecast for litigation remains strong despite the uncertain economy. 

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.