5 minutes with... patent expert Christopher Freeman

What are the current trends and emerging issues in the legal finance sector dealing specifically with litigation relating to IP and patents?

We’re seeing well-connected legal finance providers getting involved earlier in the patent monetization lifecycle. What I mean by that is, providers like Burford are using our specialized knowledge and connections to help bring together the ingredients for a successful litigation or licensing campaign, rather than waiting for those pieces to fall into place before beginning to look at a potential investment. This allows us to work with innovators to explore their options and facilitate a solution that is suited to their needs. One example of such a solution is what we call a “financed divestiture” – facilitating the transfer of patents from a corporation to an experienced claimant, and potentially bringing a preferred law firm into the mix to complete the litigation and licensing team. In this way, Burford can help to craft “optimized” monetization campaigns, which we are then happy to fund.

Executing this type of strategy requires greater amounts of capital (for example to pay for patent purchases and provide working capital to a purchaser SPV), but more than that, it requires an experienced patent finance team that has deep connections to all sectors of the patent monetization ecosystem. Burford is well positioned on both fronts.

Talk about the recent trend toward patent mega-verdicts and the dynamics that past cycles of mega-verdicts create.

I have previously written about so-called “mega-verdicts”—patent verdicts greater than $50 million—in the wake of some eye-popping 10-figure verdicts. Since that time, the trend toward mega-verdicts has largely continued. We haven’t seen another billion-dollar patent verdict since then, but there have been plenty of high eight- and nine-figure verdicts in the years since. I can count at least a couple dozen such awards since mid-2021.

There is some developing conventional wisdom that verdicts south of $500 million stand a better chance at withstanding Federal Circuit scrutiny, although I don’t think we’ve yet seen evidence to fully back that theory. Unfortunately, my other predictions about these mega-verdicts have come true as well but I won’t take too much credit – the headwinds were easily apparent to those of us that have been around patent monetization for any length of time. 

Mega-verdicts have almost universally led to long and winding paths through appellate courts, repeated PTO proceedings, and back to district courts on remand. In fact, of the three billion-dollar verdicts highlighted in my 2021 article, one has settled (The California Institute of Technology v. Broadcom Limited et al.; settled after a partial reversal and remand) and two (Centripetal Networks v. Cisco Systems, Inc. and VLSI Technology, LLC v. Intel Corp.) are currently in loss positions after appellate and remand activities, with additional appeals to come. It is worth reiterating that, if you’re going to go the distance with a mega-verdict, you need an experienced and well-capitalized partner in your corner.

Some in the industry have been discouraged by these developments. We’ve seen the judgment preservation insurance market start to contract and we’ve heard some funders say that they’re not looking for big patent verdicts and instead want cases that will settle. We don’t see it that way at Burford. For patent owners that seek out financing for patent litigation where the infringing technology generates many billions in annual sales, mega-verdict-level damages may be entirely appropriate. Burford is best positioned to be those claimants’ partner on that long and risky road, until the end of the line.

Financing of patent litigation is familiar to US corporations and law firms. Do you see this growing outside the US, and what factors are driving this growth?

Although US district courts remain at the center of patent litigation, we are seeing an increase in the prominence of foreign jurisdictions as part of monetization strategies. There are a few factors behind this trend. First, commerce is increasingly global and so having strong patents that you are willing to enforce in multiple jurisdictions is a key point of leverage. We routinely see patent enforcement strategies that encompass the EU, UK, Japan and increasingly, China. We even see relatively newer enforcement destinations like Brazil or India. For patent holders, working with a law firm and a funder that have global experience can be key to making efficient use of key global jurisdictions.

The second factor driving the growth of ex-US patent enforcement is the recent emergence of the Unified Patent Court (UPC) in Europe. The UPC came online in June 2023 and has already become a key jurisdiction in savvy patent holders’ monetization strategies, and it is easy to see why. The UPC offers an efficient process that can effectively result in injunctive relief across numerous EU countries, potentially putting tremendous business pressure on an infringer. Although it is still early and we don’t have many specific data points showing the UPC’s effectiveness, at Burford we’re bullish on the court’s potential and will be watching closely as precedent develops. In anticipation, the Burford patent team has been strengthening our ties to top European counsel and working with patent holders to craft UPC strategies. 

How do you see increased interest in patent divestitures by large corporations shifting the way businesses think about their patent portfolios?

Financed divestitures can honestly be a game-changer for corporations and corporate IP departments. We recently published a detailed article on the topic but a fundamental feature is this: Rather than being a cost-center for a business, an IP department can become a revenue-generator through the strategic use of patent divestitures. This is huge for businesses as many are looking for ways to cut costs and increase revenue in an era of economic turbulence.

As corporations understand the menu of options available to monetize their patents, more and more are embracing this shift. Many corporations are reluctant to act as plaintiffs themselves to enforce their patent portfolio, for a number of valid strategic reasons. Financed divestitures allow those corporations to generate revenue from their patents – in the form of an upfront purchase price, back-end participation in monetization proceeds or a combination of the two – without taking the step of actually initiating a lawsuit. Burford is increasingly working with corporations to help them understand the options and to craft and finance an optimal monetization strategy.

5 ... favorite things to do in Chicago.

1.       Grab a meal at one of Chicago’s world-class restaurants. Did you know that Burford’s new Chicago office at 609 W. Randolph sits right at one end of Chicago’s “restaurant row”? That can’t be a coincidence.

2.       Spend an afternoon at one of Chicago’s museums. True story: I have three daughters, ranging in age from four to 13. There are precious few activities that everyone can agree on but a Sunday afternoon at the Museum of Science and Industry checks that box.

3.       Grab a drink at a summer street fair or neighborhood fest. Basically, anywhere you might find yourself outside on a summer evening with a cold beverage in your hand (see also: Wrigley Field for a Cubs game). Chicago reliably gets like 2.5 months of actual summer weather, but man, do we make the most of them!

4.       Take in a Northwestern sporting event. As a proud alum, I pity fans of other Big Ten schools, who must find their schools’ “consistent athletic excellence” terribly boring compared to the roller coaster we’re often treated to in Evanston. While NU builds a new Ryan Field, check out one of the non-revenue sports that play on the gorgeous lakeside facilities. They are consistently great!

5.       Criss-crossing the Midwest to my daughters’ club soccer tournaments: If you go strictly by “time spent on an activity,” this really must be one of my favorite things to do because it out-paces numbers one through four in a landslide.