Defend Your IP Without Breaking Your Bank
August 3, 2022

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Our goals today
1. Tell you about litigation funding
2. Lit funding as case study for the
business/law problems you will face

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Congratulations!
You’re in the C-Suite of a
high-flying startup!

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Welcome to the C-Suite’s hot seat
Limited capital
Limited time
Focus on product and company growth
IP is essential to your business

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Intellectual Property
• The backbone of many (most?)
modern companies.
• Depends on legal rights that may
need to be enforced in court.

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The patent burglar
• You develop an innovative solution to a
long-established problem, disrupting a
multi-billion-dollar market.
• You win several patents on your
technology.
• Your competitor then implements the
technology you patented.

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The trade secret stealer
• A Silicon Valley unicorn says it wants to
acquire your company.
• You sign an NDA and share your
confidential trade secrets.
• Suddenly, the deal is off … six months
later, your technology appears on the
unicorn’s app.

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The trademark thief
• You start an innovative new brand that
consumers love.
• Someone you’ve never heard of slaps
your trademark on their (inferior)
product.
• Customers are confused and frustrated by
the new inferior product hitting the market.
Your sales tank.

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Remember the C-Suite’s hot seat …
Limited capital
Limited time
Focus on product and company growth
But IP is essential to your business

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Litigation Finance
Any transaction where a
legal claim secures financing
(typically non-recourse)

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A Third Way to
Access the Courts
Hourly fee model.
Lawyer paid by the
hour (but most
clients don’t have
that kind of money)
Contingent fee.
Lawyer has
contingent fee (but
most lawyers can’t
take that much risk)
Litigation finance.
Third-party finances
the litigation in
exchange for a share
of case proceeds.

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• CEO of Drone On
• Patent infringement claim against a
competitor, Bad Drone
• Damages: $30 million
• Cost of litigation: $4 million
• Legal fees: $3 million
• Expenses: $1 million
Meet Sophia

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Sophia’s Funding Deal
LEGAL FEES
LEGAL FEES
$3,000,000
Validity invests 50% ($1.5M)
Firm invests 50% ($1.5M in hours)
CASE COSTS
COSTS
$1,000,000
Validity invests 80% ($800K)
Client invests 20% ($200K)
DAMAGES
DAMAGES
$30,000,000
Client receives 60% ($18M)
Firm receives 20% ($6M)
Validity receives 20% ($6M)

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Financing Sophia’s Case
Self-Funding Litigation Funding
$$ Invested in Litigation
$$ Invested in Core
Business
Downside Case
(At-Risk Capital)
Upside Case
Upside Case ROI

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Financing Sophia’s Case
Self-Funding Litigation Funding
$$ Invested in Litigation $4,000,000
$$ Invested in Core
Business
$0
Downside Case
(At-Risk Capital)
($4,000,000)
Upside Case $30,000,000
Upside Case ROI 7.5x

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Funding Sophia’s Case
Self-Funding Litigation Funding
$$ Invested in Litigation $4,000,000 $200,000
$$ Invested in Core
Business
$0 $3,800,000
Downside Case
(At-Risk Capital)
($4,000,000) ($200,000)
Upside Case $30,000,000
$18,000,000 plus
ROI from core business
Upside Case ROI 7.5x 90x

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Weighing Sophia’s financing
options
• Equity
• Debt
• Litigation Finance

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What do funders look for in
a case?
Strong Legal
Merits
Meaningful
Damages
Collectable
Defendant
Best In Class
Counsel
Reliable Client Reasonable
Expectations

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What should I be doing now?
1. Understand the importance of IP rights (legal
rights!) to your business model
2. Recognize that your legal problems are business
problems (and vice versa)
3. Think creatively, with a business mindset, about
how to solve your business/legal problems and
defend your IP

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Stay in Touch

Fairness. Clarity.
Innovation.
t. 1 646 798 7168
will.marra@validityfinance.com