Why is IP an important component of a litigation finance portfolio?
“I need all green lights for a go. Any one that’s red would kill the deal. Just like an Apollo mission, if you don’t get all green lights, the rocket doesn’t get off the ground.”
Director
Longford Capital

Your role focuses heavily on due diligence, correct?
How similar is the due diligence process to that of evaluating a case when you were a litigator?
Due diligence in patent litigation requires significant experience to see the traps.
With all this in mind, is there a pivot point, a fulcrum, where you feel like you have enough? Where do you say, OK, we’re going to make this bet?
There isn’t one thing that drives it, because there’s so much that we have to consider — it is a complex decision. It could be a great infringement case, with a strong validity story, and significant damages involving well-heeled defendants. But if the claim owner is unreasonable in their settlement expectations and wants to get a billion-dollar judgment, I’m going to say no. On the other side, I can have a claim owner who says, “Listen, I just want a reasonable number out of this. I don’t need money that is life changing. I just want to be paid for my invention.” OK, maybe. But if the patent infringement read is weak, I’m going to say no.
There’s no one thing that pushes me one way or the other. There are so many issues that get baked into a decision to say yes. The first gate you have to clear, however, is infringement. There must be a strong infringement case — if you can’t get past that, nothing else matters. Next, we will evaluate validity and damages. Then it becomes a discussion of the reasonableness of everybody involved, all the parties.
It sounds like Mission Control for a space launch — going around the room desk by desk to make sure all systems are go.
That’s a good analogy — it highlights the difficulty in getting these cases approved for funding. I need all green lights for a go. Any one that’s red would kill the deal. Just like an Apollo mission, if you don’t get all green lights, the rocket doesn’t get off the ground.
Critics of litigation finance often fall back on a champerty and maintenance argument — that somebody who has a financial interest in the case is inherently going to be directing things. How much merit is there to that argument and does that impact your due diligence process?
Despite the complexities, do you think the benefits outweigh the risks in financing IP cases?
IP cases are risky and they can be tough to evaluate. But from my funders’ point of view on what the returns can be and the ability to protect your investment, yes, the benefits outweigh the risks.