A client with a product patent and a strong infringement read wanted to enforce its patent against its competitor but was concerned about the risk of counter assertion by the defendant against its own products. As such, they sought to find a suitable litigation funding partner who could support their claim.
Deminor’s due diligence process includes gaining an understanding not only of the legal merits of the case but also the commercial background to the dispute. This means understanding any litigation history between the parties which could be leveraged to impact the case that requires litigation funding. A review of the proposed Defendant is also key to understanding their litigation experience and behaviour in addition to the reviews of their financial standing. More broadly, Deminor’s review looks at IP litigation within the market space in which the parties are operating as well as the market presence of the client in key jurisdictions for the Defendant in order to build a picture of the risk. Understanding the defendant’s patent portfolio is key in assessing whether there is any risk to the client of a strong infringement case being brought against it. This exercise may also be helpful in identifying the defendant’s applications which could be open to a validity challenge as an additional possibility in putting together the case strategy.
The risk assessment of counter-assertion by the defendant is a risk which exists in any patent enforcement case, whether that case is financed through litigation funding or by the client itself. Risk assessments of counter-assertion require a realistic commercial approach. It is commercially unlikely that a Defendant would incur the cost (in both money and time) and risk to the validity of its own IP by enforcing its own patents against a client if the cost / benefit analysis was not favourable. Enforcing patents is an expensive and time-consuming process and to initiate proceedings in a jurisdiction where the client has a minimal footprint would not be economical.
"The benefits of litigation finance in taking the risk of litigation off a company’s balance sheet and turning that liability into a contingent asset needs to be balanced against the downside risk of the defendant enforcing its own IP against the client. A commercial risk assessment with knowledge of the defendant’s IP portfolio against the size and nature of the client’s operations in those jurisdictions is essential."