Patent Litigation Funding: How Third-Party Capital Is Reshaping IP Enforcement
Patent litigation in the United States costs an average of $3–5 million through trial for cases with more than $25 million at stake, according to the AIPLA. This cost barrier has historically allowed well-funded defendants — often large technology companies — to outlast patent holders in protracted legal battles. Third-party litigation funding has fundamentally altered this dynamic.
How Patent Litigation Funding Works
A litigation funder provides non-recourse capital to a patent holder or law firm to cover legal fees, expert costs, and other litigation expenses. In return, the funder receives an agreed-upon share of any settlement or judgment. If the case is unsuccessful, the patent holder owes nothing — the funder absorbs the loss entirely.
- Single-case funding
- Capital for one specific patent infringement action, typically $1M–$50M depending on case value and complexity.
- Portfolio funding
- A facility covering multiple related or unrelated patent cases, allowing cross-collateralization and more favorable terms.
- Law firm funding
- Capital provided directly to a firm taking patent cases on contingency, enabling them to carry more risk.
What Funders Evaluate in Patent Cases
Patent cases present unique diligence challenges compared to general commercial litigation. Specialized funders typically assess:
| Factor | What Funders Analyze |
|---|---|
| Patent validity | Prior art exposure, prosecution history, IPR/PGR risk |
| Infringement strength | Claim construction outlook, evidence of use, design-around risk |
| Damages potential | Royalty base, comparable licenses, lost profits theory |
| Defendant profile | Ability to pay, litigation behavior, settlement history |
| Venue and timeline | Expected duration, judge tendencies, parallel proceedings |
Market Landscape
The litigation funding market exceeded $19 billion globally in 2025 and is projected to surpass $50 billion by 2035. Patent and IP cases represent one of the largest segments, driven by rising litigation costs and the growing recognition of patents as financial assets. A 2025 GAO report found that third-party funding is increasingly common in patent cases before both federal courts and the International Trade Commission.
Key players range from publicly traded firms like Burford Capital (NYSE: BUR) with a $7.5 billion portfolio, to specialized IP-focused funds like Soryn IP Capital and GLS Capital, which concentrate exclusively on intellectual property disputes.