AiPi understands that the costs of enforcing patents may be overly burdensome or fiscally difficult for both large and small technology companies, and so our AiPi Litigation Finance unit provides nonrecourse financing for patent infringement litigations in the US and overseas, covering all costs and services related to each financed litigation in return for a share of the settlement or award.
AiPi Litigation Finance focuses exclusively on financing patent infringement cases, which tend to be more predictable than other types of litigation in terms of cost, duration and damages. AiPi Litigation Finance invests only in meritorious claims brought by patent owners who face a threat to their business due to the infringing activities of others. AiPi Litigation Finance originates transactions through our large network of law firms, corporations, universities, and private equity firms.
AiPi Litigation Finance has developed a rigorous due diligence process to evaluate each prospective case. After we invest in a case, we leave the legal strategy and settlement decisions to the patent owner and the patent owner’s legal team. For successful cases, AiPi Litigation Finance claims a minority portion of the settlement proceeds in return for having financed up to 100% of the legal fees and costs associated with the case.
AiPi Litigation Finance provides solutions serving three important constituencies:
- Corporate patent holders who partner with us for creative financing that allows for pursuing their claims while sharing risk
- Law Firms seeking alternative financing arrangements for their clients
- Investors looking to create high returns that are not correlated to broader capital markets
Corporate Patent Owners
Corporate patent owners must carefully weigh the costs and benefits of litigation, potentially passing-up meaningful opportunities to defend corporate patent assets or launch an offensive suit that can meaningfully increase company value.
AiPi Litigation Financing allows corporate patent owners to engage in high-stakes litigation and transform the process from a liability into an asset by taking ongoing, lumpy expenses and moving them off the balance sheet while maintaining the potential to recognize large gains arising from a successful outcome.
Because AiPi pays the upfront and ongoing litigation expenses, corporate patent owners do not need to choose between pursuing an expensive and uncertain case or investing in CapEx, new product development, and growth initiatives.
AiPi Litigation Finance provides corporate patent owners with a solution to lay-off litigation risk, while
maintaining a majority of the upside that comes from a favorable settlement. AiPi Litigation Finance arrangements constitute nonrecourse funding to the company, and provide a unique opportunity to transform a corporate legal department form a cost center to a profit center.
Winning and maintaining clients has never been more competitive for law firms. Clients have become accustomed to pushing back hard against the upward trajectory of billable hours at increasing rates. Law firms can adapt to the new competitive environment by outsourcing work, increasing the roles of junior attorneys and paralegals to cases, and considering alternative financing arrangements.
However, taking cases on contingency is a risky business. Few firms have the capital or the due diligence resources in place to make calculated risk assessments to effectively identify patent cases that are acceptable candidates for contingency arrangements. Selecting the wrong cases for contingency arrangements can have a big impact on profits, distributions and morale. Law firms also find it difficult to cover the litigation costs, including those associate with the hiring of experts, travel, etc.
AiPi Litigation Finance msolves all of these problems to thereby shift risk away from the law firm. Law firm clients gain a capital-efficient way to pursue meritorious IP lawsuits, and the firm maintains a client relationship without taking undue risk.
AiPi Litigation Finance welcomes patent litigation deal flow opportunities from law firms interesting in balancing or obviating their risk by obtaining paid engagements.
Institutional and High Net Worth investors will often allocate upwards of 20% of their portfolios to alternative asset classes, such as Private Equity, Venture Capital, Hedge Funds, Real Estate, and Timber. The objective is to realize outsized returns on capital for a comparable level of risk. Many alternative assets are intended to be negatively correlated to public equity and debt markets.
Each of the asset classes mentioned above has been in existence for decades, and the dramatic growth in investment vehicles simply shows that in each class – statistically – performance eventually reverts to the unextraordinary mean. When there are more US hedge funds than there are Taco Bells, the challenge is to find that one team that is doing extraordinary things.
AiPi Litigation Finance allows investors to participate in an asset class that offers outsized returns on capital for a reasonable level of idiosyncratic, non-systemic risk with little or no correlation to the public markets. AiPi’s firmwide expertise in, and sole focus on, intellectual property gives AiPi Litigation Finance an edge in selecting promising cases.
Most Litigation Finance funds pursue a range of personal injury, class action, and trade lawsuits where the settlements can be massive. But in such cases, there are major uncertainties that no party can score: duration (and the costs associated with a never-ending process), damages, and the dice-rolling of what may come out in discovery.
AiPi Litigation Finance focuses exclusively on patent infringement litigations, a certain percentage of which tend to be highly predictable in terms of cost, duration and damages. Cases come down to objective judgments based on real science surrounding the prior art and an allegedly infringing product or service as opposed to more subjective criteria.