U.S. DOJ Examines Foreign Funding Of Patent Lawsuits

The US Department of Justice (DOJ) is investigating whether foreign entities are financing US patent lawsuits to steal trade secrets from American companies, according to a report released by the US Government Accountability Office (GAO), Blake Brittain reported for Reuters.

The GAO report noted that third-party funding now "accounts for a substantial proportion of all patent litigation."

The GAO's report on third-party patent litigation funding revealed that Justice Department officials are "examining whether foreign entities are investing in US patent litigation to gain proprietary information that would help their own industries."

However, the DOJ has not confirmed whether any active investigations into foreign misconduct are underway.

Litigation funders finance individual lawsuits or portfolios of cases in exchange for a share of any settlement or judgment.

The practice has expanded significantly in the US and abroad over the past decade. In 2023, litigation funders in the US market managed a combined $15.2 billion in assets, according to a March report.

The GAO report noted that third-party funding now "accounts for a substantial proportion of all patent litigation."

Proponents argue that such funding allows small patent holders to defend their intellectual property against larger corporations. Critics, however, claim it drives up defendants’ legal costs, forcing them to fight against weaker claims.