February 19, 2024

Key Considerations in Patent Funding and Insurance

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W. Tyler Perry

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February 19, 2024

The most consistently satisfied lawyers I know, whether at a firm or in house, are patent lawyers. In Big Law, their world seems to involve a constant stream of high-impact litigations and transactions between corporate titans.  On the boutique side, they pursue significant, often sprawling campaigns on contingency.  In house, they get to do both, liaising with senior management, while directing the efforts of outside counsel.  In other words, regardless of where they sit within the legal ecosystem, patent lawyers work at the unique intersection of law and commerce—where they help companies change corporate legal departments from cost to profit centers.

As I have moved from private practice to litigation finance, it has become increasingly clear that this service—helping companies make money from (rather than spend money on) legal risk—is exactly what litigation funders and insurers do. This article provides a high-level overview of the key considerations that we have learned to look for in deciding whether to fund or insure IP deals. 

When dealing with intellectual property litigation, which requires specialized knowledge that most lawyers do not have, quality counsel is critical.  To significantly increase your chances of securing funding or insurance, hire a strong team of proven IP counsel with substantive prior experience actually diligencing and litigating similar IP disputes.  We regularly work with topflight IP counsel and are always happy to provide a recommendation. 

Whether a funder or insurer wants to get involved with a patent portfolio or litigation often turns on questions relating to the history of the invention and its inventor(s). Accordingly, we generally look for operating companies with strong businesses that have innovated in areas of significant import to our economy. The inventor’s continuing presence in the business is usually a significant plus, particularly given the importance of telling a persuasive and compelling story to the trier of fact. Ideally, we also like to see successful licensing efforts in the past, which provides additional indicia of the patents’ strength.

To prevail in a patent case, you need to establish both validity and infringement. For validity, there are a number of indicia that we look to when assessing strength. They include, among others, the prosecution history and key pieces of prior art, the objections (if any) from the examiner, and how prosecution counsel overcame those objections. Remember, it is important to be upfront about any 101/ Alice concerns, and you will need to be able to explain why the invention was novel, non-obvious, and not anticipated by the prior art. Showing up to a funding discussion with a prior art search is always helpful.  Other issues we look for and we will need your help understanding are whether there are questions of indirect or induced infringement, and whether the defendant might raise defenses like the on-sale bar (which prevents patenting of products that have been sold for over a year prior to the application) or inequitable conduct (which asks whether the patent was fraudulently obtained). 

Once you have established that you have a protected patent interest, the question invariably becomes whether that valid patent interest has been infringed, thereby entitling you to a recovery.  Generally, that question requires an infringement analysis that outlines the specific ways that specific patents are being or have been infringed. To show this, you need to present litigation-ready claim charts that demonstrate infringement. If infringement needs to be shown through a tear-down analysis, you should try to do that tear-down, unless it is prohibitively expensive.

One of the unique aspects of the patent space is the possibility of inter partes review (“IPR”), which boils down to a challenge to the patentability of a patent in front of the United States Patent and Trademark Office (“USPTO”). Interestingly, IPR proceedings can and do occur in parallel with federal litigation, creating issues relating to whether and when to stay the litigation in favor of the IPR process.  Moreover, the simple existence and use of the IPR process naturally has a number of collateral effects, most notably relating to cost (because you need more and different lawyers litigating in multiple fora) and duration (because you potentially have two related proceedings). 

At the end of the day, many funding and insurance decisions come down to the ultimate strength of the collateral— i.e., how much do we reasonably expect to collect from the licensing or litigating of the patent or portfolio. The patent space is unique in that the value of any given portfolio is a function not only of the damages that you can secure in court, but also of the revenue you can secure in licensing. The cumulative effect of multiple revenue streams on the value of a portfolio can be quite large. An oft-overlooked part of this process is determining whether there are any potential counterclaims that could decrease the value of any recovery.

All told, the patent space is a unique and dynamic environment that implicates analyses and governmental processes not seen in most commercial litigation. Should you find yourself in need of patent funding or insurance to protect an IP judgment or counsel’s WIP for patent litigation, the best thing you can do is find an experienced team that knows what they are doing in this complicated—but fascinating—space. And we are always happy to help.  

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Recent Content

By Patrick Dempsey • October 13, 2026
This is the fourth post in Certum Group's seven-part series bringing our Trade Secret Litigation Playbook to the blog. It draws on Part IV of the Playbook, What Your Case Is Worth. Read or download the full Playbook here . Ask a business owner what a trade secret case is worth, and the first instinct is almost always the same: what did we lose? It is the intuitive measure, and it is usually the smallest one on the table. Trade secret law rewards claim holders who think about damages more expansively than "our lost sales," and the gap between the intuitive number and the recoverable number is often enormous. There are four measures worth understanding, and lost profits is only the first. Lost profits: what you would have earned The revenue you would have earned absent the misappropriation — contracts you would have signed, renewals you would have held, pricing power you could have sustained. Lost profits require you to prove causation between the taking and the foregone revenue, which is where most of the work goes. It is a real number, but it is anchored to your own historical performance, and that ceiling is frequently lower than what the case is actually worth. Unjust enrichment: what the defendant gained This is usually the largest measure, and by a wide margin. Unjust enrichment captures everything the defendant gained by taking the shortcut: the R&D and engineering it avoided, the head-start value of reaching the market faster than an independent developer could have, the savings and margins it captured, and — in the strongest cases — disgorgement of the revenue its product earned because it was built on your secret. In software, manufacturing, and pharmaceutical cases, the avoided-time-to-market term alone can dwarf your lost profits, because it measures the defendant's entire economic benefit rather than your specific loss. Reasonable royalty: the floor An objective measure grounded in what the defendant would have paid to license the secret in an arm's-length deal. It is typically the smallest of the three, but it functions as a floor when lost profits are speculative and unjust enrichment is contested. Sophisticated claim holders do not treat it as a fallback; they treat it as an independent anchor that constrains how small the number can reasonably be. Exemplary damages and fees: what willful conduct adds If the misappropriation was willful and malicious, the DTSA and most state statutes allow enhanced damages of up to twice the compensatory award, plus attorney's fees. 1 Willfulness is not a rhetorical flourish; it is a doubling, sometimes a tripling, of the core recovery. And the evidence that establishes it — an internal email, a board slide, a pattern of ignored warnings — is exactly the kind of material that discovery tends to surface. That is why intent belongs at the center of the case from day one. The Versata signal If you want a live illustration of how large the gap can be, look at the Federal Circuit's 2026 decision in Versata Software v. Ford. The trial court had tried to cap Versata's trade secret damages at a licensing-based model — essentially, what Ford would have paid — and zeroed out the rest as an undeserved "windfall." The Federal Circuit disagreed, holding that the DTSA's text expressly allows recovery of the unjust enrichment the defendant captured, even when that figure is far larger than any license fee. The message to corporate defendants is blunt: if you misappropriate rather than license, you assume the risk that the damages will dwarf what you could have paid. The message to claim holders is just as clear — the ceiling on your case is often much higher than your accountant's first estimate. Why this matters before you file Claim holders who engage a damages expert early consistently do better — not because the expert changes the facts, but because an early damages view changes three downstream decisions. It changes which counsel you hire, because the firms built for a $50 million case are different from the firms built for a $5 million case. It changes your fee structure, because a firm weighing a contingency needs a damages view to price it. And it changes settlement posture, because a plaintiff who can articulate a well-supported range anchors the negotiation, while one who cannot is negotiating against the defendant's number. The defendant almost always knows what you might get at trial. The only question is whether you do. Go deeper with the Playbook. This post covers one piece of a much larger picture. For the full framework — what the law requires, what a strong pre-filing case looks like, how damages experts value these matters, how counsel fee structures change your economics, and how litigation finance fits in — read Certum Group's Trade Secret Litigation Playbook , our field guide for business owners and the counsel who advise them: certumgroup.com/the-trade-secret-playbook . And if you are evaluating a live dispute — or simply want to pressure-test what a matter is worth and how it might be funded — get in touch. A confidential conversation with Certum is free and carries no obligation, whether or not you ultimately seek funding. Reach us at certumgroup.com/contact-us . Sources 1. 18 U.S.C. Section 1836(b)(3)(B) (permitting recovery of unjust enrichment not addressed in computing actual loss); Section 1836(b)(3)(C)-(D) (exemplary damages up to twice the compensatory award, and attorney's fees, for willful and malicious misappropriation).
By Patrick Dempsey • September 29, 2026
This is the third post in Certum Group's seven-part series bringing our Trade Secret Litigation Playbook to the blog. It draws on Part III of the Playbook, Before You File. Read or download the full Playbook here . The call usually comes from a sales leader, a head of engineering, or a chief of staff, and it usually starts the same way: "We think someone took X, and we think they took it to Y." What happens in the next three days is disproportionately important. The most expensive mistake in trade secret practice is waiting — every week that passes lets the defendant commercialize your advantage, and worse, lets the evidence quietly disappear. Slack messages, badge records, and git histories often sit behind auto-delete settings as short as ninety days. So before you do anything else, move to preserve. Here is what good early triage looks like. Issue a litigation hold — in writing, within 24 hours A written instruction to preserve any document, chat, email, calendar, or file relating to the possible misappropriation, sent to the full legal, HR, IT, and leadership teams. It should be specific enough to be useful, broad enough to catch the unexpected, and documented enough that you can produce it later. This is the single most important thing you can do in the first day. Lock down forensic images — and don't let internal IT do it Laptops, phones, and company devices belonging to any suspected party should be forensically imaged by an outside forensics firm, not wiped or "checked" by internal IT. Chain of custody matters, and internal teams generally cannot testify to it at trial. The right instinct is to image broadly and review narrowly: you can always decline to look at a device you preserved, but you can never go back for one that was reissued, wiped, or sold. And don't forget the non-obvious sources — personal cloud drives, USB connection histories, printer spooler logs, and screen-capture utilities are often where the decisive evidence actually lives. Extend retention on cloud and platform logs Have IT extend retention on the relevant accounts and export the log data — access logs, download histories, egress traffic — before anything rolls off. The forensic story of who did what, when, and with which file is usually more persuasive to a judge than any human witness. A download at 11:47 p.m. the night before a resignation is powerful evidence because of what the timing means. Do not tip off the adversary Resist the urge to confront the suspected employee, their new employer, or their counsel. Confrontation at this stage tends to accelerate deletion and pull communications behind privilege claims. A carefully timed cease-and-desist letter, sent after preservation is secure, is a very different move — and a far more effective one. Investigate under privilege Any investigation you run should be conducted under attorney direction, so that the work product is privileged and your witness interviews do not become admissions used against you later. This is not about secrecy for its own sake. It is about making sure the investigation helps your case rather than becoming evidence in it. Consider — but do not rush — the early public filing Ex parte seizure orders, temporary restraining orders, and preliminary injunctions all have their place, and an early injunction can be the single most valuable outcome in the whole case. 1 But these motions require a level of evidentiary support you rarely have on day three. It is almost always better to spend a week building the record than to file fast and lose the first motion, which hands the defendant a narrative and hands you a hole to climb out of. The triage checklist If you want a single page to keep by the phone, it looks like this: litigation hold issued in writing within 24 hours; outside forensics firm retained and imaging scheduled; cloud and platform log retention extended; a list of suspected individuals plus their managers and peers; a list of the specific secrets that may have been taken; copies of every NDA, employment agreement, and IP assignment covering them; a review of the last 90 days of their calendar for unusual patterns; and outside trade secret counsel engaged under privilege. Do the first 72 hours well and you preserve every option that follows — injunction, damages, settlement leverage. Do them poorly and you may spend the next two years litigating around evidence you could have saved in an afternoon. If you are in the opening days of a matter and want a fast, confidential read on what to do now versus later, that is exactly the conversation we have most often. Go deeper with the Playbook. This post covers one piece of a much larger picture. For the full framework — what the law requires, what a strong pre-filing case looks like, how damages experts value these matters, how counsel fee structures change your economics, and how litigation finance fits in — read Certum Group's Trade Secret Litigation Playbook , our field guide for business owners and the counsel who advise them: certumgroup.com/the-trade-secret-playbook . And if you are evaluating a live dispute — or simply want to pressure-test what a matter is worth and how it might be funded — get in touch. A confidential conversation with Certum is free and carries no obligation, whether or not you ultimately seek funding. Reach us at certumgroup.com/contact-us . Sources 1. The ex parte seizure procedure is authorized by the Defend Trade Secrets Act, 18 U.S.C. Section 1836(b)(2), and is available only in extraordinary circumstances.
By Patrick Dempsey • September 15, 2026
This is the second post in Certum Group's seven-part series bringing our Trade Secret Litigation Playbook to the blog. It draws on Part II of the Playbook, Trade Secret Law in Plain English. Read or download the full Playbook here . Here is a statistic that surprises most executives: in federal trade secret cases that reach a verdict, plaintiffs win roughly 84% of the time. 1 That is dramatically better than the plaintiff win rate in commercial litigation generally. It does not mean every case is easy — the cases strong enough to reach a jury are a selected group — but it tells you something important about what happens when a well-built trade secret claim gets in front of a fact-finder: courts tend to enforce the rights the statute was designed to protect. So why do good claims still fail? Usually not at trial. They fail earlier, on assumptions the claim holder never stopped to test. In more than a decade of evaluating these matters, the same handful of misconceptions come up again and again. Here are six worth clearing up before they cost you a case. Myth 1: "It's only a trade secret if we stamped it CONFIDENTIAL." Marking helps, but it is not required. What matters is whether your overall secrecy program is reasonable under the circumstances — a holistic look at contractual, physical, and technical controls. A perfect stamp on an otherwise open system is worth less than a coherent program with a few gaps. Myth 2: "If part of it is public, none of it is protected." Courts routinely protect a combination of individually public facts when the particular combination delivers competitive advantage. The recipe can be assembled from ingredients anyone can buy. What you protect is the assembly. Myth 3: "Our employees signed NDAs, so we're covered." NDAs are a foundation, not a program. The full set of reasonable measures a serious claim holder is expected to have includes access controls, badging, egress monitoring, exit procedures, and technical segmentation. An NDA in the drawer and nothing behind it is exactly the gap a well-resourced defendant will press on first. Myth 4: "We didn't sue the last person who left, so it's too late now." Trade secret protection is evaluated case by case. Declining to act on one departure does not forfeit your rights as to the next one. Every matter stands on its own facts. Myth 5: "We're too small to enforce against a big company." This one gets the economics backwards. A well-funded claim against a large, solvent defendant is often easier to win — and easier to collect — than a disorganized claim against a small one. Resources can be added to a strong case; facts cannot be added to a weak one. The right capital partner exists precisely so that a smaller plaintiff can stand toe-to-toe with a much larger adversary and neutralize the outspend-them tactics that used to decide these fights. Myth 6: "It's just know-how — courts don't protect that." Courts protect integrated know-how constantly. The question is never whether know-how is capable of protection; it is whether you can identify it with enough particularity to describe what was taken. 2 That is the single most consequential early decision in the case, and it is the one most claim holders do not realize they are making when they plead "our proprietary software" instead of the specific, described combinations that actually give them an edge. The through-line Notice what these myths have in common: each one leads a claim holder to under-invest in a case that the numbers say is very winnable. The 84% figure is not a promise. It is an invitation to take the early work seriously — the secrecy program, the identification, the evidence — because that work is what turns a strong set of facts into a strong case. Get those right, and the law is on your side more often than in almost any other kind of commercial dispute. Go deeper with the Playbook. This post covers one piece of a much larger picture. For the full framework — what the law requires, what a strong pre-filing case looks like, how damages experts value these matters, how counsel fee structures change your economics, and how litigation finance fits in — read Certum Group's Trade Secret Litigation Playbook , our field guide for business owners and the counsel who advise them: certumgroup.com/the-trade-secret-playbook . And if you are evaluating a live dispute — or simply want to pressure-test what a matter is worth and how it might be funded — get in touch. A confidential conversation with Certum is free and carries no obligation, whether or not you ultimately seek funding. Reach us at certumgroup.com/contact-us . Sources 1. Stout, Trends in Trade Secret Litigation (2024), reporting an approximately 84% plaintiff-favorable outcome rate across 271 federal trade secret cases reaching a verdict since 2017. 2. Both the federal Defend Trade Secrets Act (18 U.S.C. Section 1836) and the state Uniform Trade Secrets Act define a trade secret as information that derives independent economic value from not being generally known or readily ascertainable, and that is the subject of reasonable measures to keep it secret.