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PublishedMarch 13, 2024

Another Litigation Funding Dispute

In what has become a recurring topic on Patent Progress, another dispute between a patent troll and a litigation funder has emerged. This time, it is between the Irish NPE, Arigna Technology; its law firm, Susman Godfrey; and the litigation funder, Longford Capital. Arigna is one of a number of NPEs run by a hedge-fund backed entity called Atlantic IP.  (For more on Atlantic, see this post about some of their other shell companies.)  One target of Arigna’s lawsuits, BMW, has also needed to get involved. 

What is striking about this dispute is how complicated it is. First there is the conflict between Arigna and Longford, by way of Arigna’s law firm. In 2023, Arigna and more than a dozen other patent holders entered a settlement and licensing agreement with an unnamed defendant. In those cases, the payment was made to the monetization entity Atlantic IP, which was then tasked with distributing funds to all the investors. Longford believed that it was entitled to payment based on the entire settlement pot, not just Arigna’s share of it. Hence the dispute between the patent troll and the investor. To complicate the case even further, it was Arigna’s law firm, Susman Godfrey, not Arigna itself, that secured funding from Longford–reportedly in order to reduce its own risk. 

In comes BMW. Arigna has sued BMW six times in recent years across multiple countries and venues. In a filing with the US District Court for the District of Delaware, BMW claims that Arigna owes the car manufacturer between $380,000 and $1.1 million in fees after the company fought–and won–two patent infringement suits in Germany. BMW has not been able to receive payment, resulting in them pushing to intervene in Arigna’s dispute with Longford. BMW asserts that it is entitled to payment first, before settlement funds (from the separate case) are distributed between Arigna and Longford.   

Adding another wrinkle, a clerical error resulted in the funding agreement between Susman Godfrey and Longford becoming public. The agreement revealed the financial stakes underlying decisions about case strategy, including that, per reporting by IAM, “Longford would receive a smaller percentage of the proceeds if there was an early settlement. Longford was set to receive 30% of the proceeds if the case ended before the first scheduled claim construction hearing, or four months before a scheduled evidentiary hearing at the ITC. If the case continued beyond that, Longford was set to receive 42.5% of the proceeds.” 

Litigation investors routinely claim that they have no influence over legal strategy, but each time a funding agreement becomes public, the less believable these assertions become. We shouldn’t need a clerical error or squabbles over payment to see who is pulling the strings on cases being decided in US courts. The complicated web of financial interests and payments shows the legal manipulation that can happen behind the scenes and also demonstrates how these agreements can make it more difficult for operating companies to be compensated when they are targeted with baseless claims. 

We need mandatory litigation funding disclosure in the courts and at the ITC.  Until we have it, these shell games will continue, rewarding hedge funds and private equity at the expense of American industries.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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