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Litigation funding for IP disputes can give businesses a way to enforce their intellectual property rights without having to cover millions of dollars in legal costs upfront. You have a valid patent. A competitor is using your invention without permission. Your attorney confirms you have a strong case. And then comes the number that stops most businesses cold: patent litigation in the United States can cost upwards of $1-5 million to take through trial.
For most founders and mid-sized businesses, that number ends the conversation before it starts. The infringer keeps operating. You walk away from a legitimate claim because you don’t have the upfront capital to back it.
Fortunately, that’s the problem litigation funding was built to solve. At Gearhart Law, we work with inventors, startups, and businesses across New Jersey and New York on exactly these situations, cases where the claim is strong but the cost of enforcement has felt out of reach.
Here is what you need to know about litigation funding as a path forward.
What Is Litigation Funding for IP Disputes?
Litigation funding, also called legal finance or third-party funding, is when an outside investor finances your legal case in exchange for a portion of the recovery if you win. If you lose, you owe the funder nothing. It is non-recourse capital, meaning your business is not on the hook for the investment.
The funder bets on your case. They conduct their own due diligence, assess the strength of your claims, and decide whether the expected recovery justifies their investment. If they fund it, they cover attorney fees, expert witness costs, and other litigation expenses while the case runs.
You keep running your business. The funder carries the financial risk.
Is Litigation Funding a Legitimate Option?
Yes, it is an entirely established avenue. Funders are institutional investors with dedicated legal teams who evaluate patent cases the same way a private equity firm evaluates a deal. Here are some major players you are likely to encounter in your search for the right fit:
- Burford Capital: The largest litigation funder in the world, publicly traded on both the NYSE and the London Stock Exchange. Burford funds single-case patent disputes as well as portfolio-wide IP structures, meaning they can back one strong claim or a series of related cases across your IP portfolio. They also offer IP monetization services for companies looking to unlock value from patents they are not actively commercializing.
- Omni Bridgeway: A global funder with a strong track record in commercial and IP litigation. They invest in corporate claims, patent disputes, and international arbitration, with offices across multiple jurisdictions if your infringement issue crosses borders.
- Longford Capital: A U.S.-focused funder that specializes in complex commercial litigation including patent enforcement. Known for taking on cases with strong damages potential where the plaintiff cannot absorb the cost of litigation from operating cash flow.
- Harbour Litigation Funding: One of the largest independent litigation funders in the market, active in high-value IP and commercial disputes with a particular focus on cases involving significant damages claims.
If a funder is willing to back your case, that is itself a signal. Their due diligence is rigorous, and their capital is only at risk if you lose. You both win or you both lose. That shared risk is what makes litigation funding a legitimate enforcement path.
What Cases Qualify?
Funders are selective. They are looking for cases with a high probability of recovery and a damages figure large enough to justify their investment. For IP disputes, that typically means:
- A clear and defensible patent, trademark, or copyright
- An identifiable infringer with the ability to pay
- Estimated damages that justify the cost of litigation (generally $5 million or more in potential recovery)
- A legal team with experience taking cases to verdict or favorable settlement
What Does the Funder Get?
Funders typically receive a percentage of your recovery, often between 20% and 40% depending on the risk profile, duration, and size of the investment, or a multiple of their invested capital, whichever is agreed to before funding begins.
It is not cheap. But compare it to the alternative: walking away from a claim worth millions because you cannot front the costs. For most businesses, giving up a portion of a large recovery beats recovering nothing at all.
Is Patent Litigation Funding Right for Your Business?
Litigation funding works best when three things line up
First, your claim is strong. Second, the potential recovery is large enough to justify a third-party cut. Third, you cannot or do not want to absorb the full cost of litigation from your operating budget.
Just be aware that bringing in a funder changes the dynamic. Funders have their own interests in how your case gets resolved. Settlement timing, terms, and strategy can all be shaped by the funding agreement. You need an attorney who understands how to structure that relationship properly from day one, before you sign anything.
Talk to an IP Attorney First
Litigation funding has shifted the balance of power in IP enforcement. It used to be that only large corporations could afford to pursue infringers aggressively. Today, a startup with a strong patent can take on a much larger competitor on equal footing (if the claim is solid and the economics make sense).
Before you approach a funder, you need a clear picture of your claim, including the strength of your IP, the scope of the infringement, and a realistic damages estimate. Funders will ask for all of this. Getting your ducks in a row before that conversation makes you a far more credible candidate for funding.
That analysis starts with an experienced patent attorney. Gearhart Law works with inventors, startups, and established businesses across New Jersey and New York on patent enforcement strategy. If you think you have a claim worth pursuing and your cash flow feels like a damaging limitation, reach out for a free half-hour consultation with our team.
Frequently Asked Questions About Litigation Funding for IP Disputes
What is litigation funding, and how does it work for IP cases?
A third-party investor covers your litigation costs in exchange for a share of the recovery if you win. If you lose, you owe them nothing. It is a way for businesses with strong IP claims to pursue enforcement without having to front hundreds of thousands of dollars out of pocket.
Does using a litigation funder mean I lose control of my case?
Not entirely, but it is worth understanding before you commit. Funders have their own interests in how a case resolves, and those interests can shape settlement timing and strategy. It is not a reason to avoid funding, but rather a reason to have an experienced attorney review any agreement before you sign.
What size claim do I need to qualify?
Funders often look for potential damages of $5 million or more on a single case. If your claim is smaller, portfolio funding (where a funder backs several of your IP claims together) can sometimes bridge that gap. Every situation is different.
How much of my recovery goes to the funder?
Generally between 20% and 40%, depending on the size and risk of your case. It is a real cost. But for businesses that cannot afford to litigate otherwise, recovering a portion of something beats recovering nothing. Plus, it stops the infringer. One month a competitor uses your IP without consequence; another month they are building market share on the back of your investment. Funding turns a claim you could not afford to pursue into one you can act on.
Is litigation funding a legitimate path or a last resort?
It is a legitimate strategic option that established businesses and sophisticated patent holders use regularly. If a reputable funder agrees to back your case after their due diligence, that is actually a meaningful vote of confidence in your claim.
Where does an attorney fit into all of this?
At the beginning. Before you approach any funder, you need a clear picture of what your claim is actually worth and how defensible your IP is. That is the conversation to have first. Reach out to Gearhart Law, and we can help you work through it.