Defense-Side Patent Litigation Financing: a Practical Solution for Inventors Harmed by the Patent System

Abstract

Small businesses in the United States are a major source of innovation and economic growth and employ more scientists and engineers than either large businesses or universities. In spite of these facts, recent reform in the patent system has had a disproportionately negative impact on small business. Many of these reforms were drafted with the intent of supporting small business; the changes to the patent system under the Leahy-Smith America Invents Act have had unintended consequences. There is a significant body of literature discussing the negative effects of patent reform on small business and proposing legislative solutions, but there has been little discussion about practical solutions to help undercapitalized inventors now. To help fill this gap, this article offers a discussion of defense-side patent litigation financing as a potential practical solution for small businesses and independent inventors faced with new challenges under current law. Defense-side patent litigation financing could provide protection for innovators who currently have little to no recourse, such as those unable to afford patent insurance while also proving beneficial to lawyers, finance firms, and the economy overall.