PATENT
LITIGATION

LITIGATION FINANCE FOR
INTELLECTUAL PROPERTY CLAIMS

 
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A LEADER IN MONETIZATION SOLUTIONS


 

A trusted partner to sophisticated patent owners and litigation counsel, Parabellum is one of the most established patent litigation financiers in the world. Although patent owners and litigators have more options than ever today to finance their litigations, three things set Parabellum apart in the patent space:

1. In-House Expertise

Parabellum understands patents and all phases of patent monetization, from portfolio mining to appeals before the Federal Circuit. Parabellum is staffed with individuals that have spent years litigating patent cases, on “both sides of the v,” for firms like WilmerHale, Cravath, Swaine & Moore, and Paul Hastings. Among other benefits, this allows diligence to be conducted largely in-house, making the process much quicker than other funders.

2. Autonomy

Parabellum has its own balance sheet and control of that balance sheet. The proliferation of so-called “faux funders,” who first agree to fund cases and only then raise money to finance those cases, increases the risk of striking of a deal, only to see it fall through. In addition, some funders are backed by a single source of capital, which invariably has a voice in how that capital is deployed. Indeed, clients may not realize that the funding of their case is controlled by a single investor that will never be disclosed.

At Parabellum, your primary contact will be the person who presents your case to Parabellum’s Investment Committee. That Investment Committee is compromised exclusively of Parabellum principals, all of whom work in Parabellum’s New York office.

3. Sharing Risk and Reward

Parabellum has the experience and expertise to design structures that work for everyone in the transaction. Parabellum understands the challenges of the current patent monetization environment. To help manage those challenges, Parabellum seeks to partner with patent owners and patent litigators to design transactions that maximize value for all parties involved. With many other funders, often the only parties that realize substantial gains from litigation victories are the lawyers and the funders. Parabellum understands that transactions only work if everyone shares in the risk and in the upside, and designs structures that align with that philosophy.

CORE PRINCIPLES

Parabellum will consider financing any type of patent litigation, in any jurisdiction, from the U.S. International Trade Commission to the Shenzhen intellectual property court. Although the deal terms will be specific to the transaction, three aspects are common to all investments:

1. Alignment

Patent enforcement is most successful when all parties are aligned. While other funders may claim to structure aligned transactions, it is rarely true in practice. At Parabellum, we exclusively structure transactions where each party is incentivized to maximize the value of the claim and share in that recovery. We will not participate in deals where law firms claim to have "skin in the game," yet insist on a multi-million dollar budget designed to protect law firm profitability even where cases are unsuccessful.

2. No Control

Parabellum does not control your litigation. We are a passive value investor. We are, of course, happy to provide strategy and guidance as requested, but the patent owner and its litigators remain in sole and exclusive control of all litigation and, in particular, settlement decisions.

3. Non-Recourse

Parabellum’s financing will be provided on a non-recourse basis. This means Parabellum’s financing is not secured by any assets other than the proceeds of the litigation. If you win, you and Parabellum share in the upside. If you lose, you owe Parabellum nothing.

4. Complimentary Case Assessment

Parabellum assesses patent (and all other) claims on a complimentary basis. We do this through our own independent analysis, as well as in conjunction with leading patent litigation counsel.

TRANSACTION STRUCTURES

Parabellum's patent monetization financing generally involves one of the following four types of transactions: (1) portfolio mining, (2) licensing and litigation campaigns, (3) late-stage monetization, and (4) law firm portfolio financing.

1. Portfolio Mining

Obtaining and maintaining IP is expensive, and the downturn in patent licensing has resulted in many companies and universities holding large patent portfolios that no longer generate substantial revenue. Often only a few patents in a portfolio are responsible for most of its value, but it can be very expensive to determine what those patents are and who is infringing them. Parabellum can help. Parabellum can finance a thorough mining of the portfolio by subject matter experts that have years of experience in selecting key patents for licensing. When combined with Parabellum financing for licensing and litigation campaigns, Parabellum can finance and help manage an end-to-end solution for companies seeking to unlock the value of their IP.

2. Licensing and Litigation Campaigns

Patent litigation is among the riskiest types of litigation in existence today. Patent owners generally must proceed deep into cases—often past petitions for inter partes review and claim construction—before infringers will pay fair value. Parabellum can give you the firepower to retain the best lawyers and experts and go the distance in your litigation, ensuring you receive fair compensation from patent infringers. Parabellum is especially focused on financing global enforcement campaigns, in which patent owners can open multiple fronts against infringers, potentially in jurisdictions with patent systems that are more favorable to patent owners. 

3. Late-Stage Monetization

The median time to trial in a patent case is approaching 2.5 years, with cases often taking much longer than that due to stays of district court cases pending IPR. In addition, infringers will invariably appeal any significant verdict to the Federal Circuit, further lengthening the time to money. Parabellum can help shorten the path to money by “monetizing” claims that have successfully proceeded past IPR and claim construction. In this type of transaction, Parabellum pays the patent owner a portion of the expected judgment now in exchange for part of the ultimate settlement or judgment. This structure can be attractive to companies that need working capital and have valuable IP assets tied up in litigation.

4. Law Firm Portfolio Financing

In addition to providing financing for single cases, Parabellum also provides financing to law firms on a “portfolio” basis. This can be particularly attractive to firms with patent contingency practices, allowing them to capture more business by offering clients what are, from the client’s perspective, full contingency arrangements, but which, from the firm’s perspective, still provide for the benefits of a hybrid-contingency structure. In these transactions, Parabellum provides financing across a number of contingency cases and generally takes its returns only from the firm’s contingency share in each case, leaving clients unaffected by the financing.  

 

 

CONTACT

Sean Thompson
 

Sean Thompson

Director of Intellectual Property Strategies

sthompson@parabellumcap.com

(212) 726-2644