Geoffrey White is General Counsel, Chief IP Counsel, and on the Board of Directors at SilcoTek, a high-tech materials science manufacturing company in the United States. At SilcoTek, Geoffrey balances his role as an attorney, an IP strategist, and a manufacturing executive. He also separately launched Innovative Product (IP) Manufacturing to help commercialize and monetize more innovative ideas (see www.IP-mfg.com).
Geoffrey has a true passion for value-enhancement, applying his experience and education, including a Cambridge MBA, a George Washington IP-LLM, a Widener JD, and a Chemistry BS from the University of Pittsburgh. He is collaborating with Cambridge’s Institute for Manufacturing, Innovation and Intellectual Property Management on patent strategy research, volunteers for the Penn State Start-Up Leadership Network on several Boards of Advisors, and is always open to discussing the intersection of law (especially patent law) and corporate strategy.
SilcoTek provides game-changing coating service to solve challenges for some of the largest global organizations in the world, especially in semiconductor, analytical instrumentation, life science, and energy industries. Properties include inertness, corrosion resistance, metal-ion containment, and more (see www.SilcoTek.com). SilcoTek has coated parts that have been sent throughout the world, into the Earth, to space, to Mars, to an asteroid, and to places unknown.
Below is our LFJ Conversation with Geoffrey White:
I understand you are participating in a litigation funding agreement as General Counsel and Board Member of a manufacturing company. What was your selection process like in terms of the litigation funder you opted to partner with? What were you looking for in an agreement, how many funders did you speak to, and what did that funder offer that others did not?
Just a few years ago, we at SilcoTek were totally unaware of the growing litigation finance community. I attended an intellectual property conference in New York and heard Sarah Tsou of Omni Bridgeway describe how it works. She discussed the waterfall in many agreements, their initial terms sheet, the due diligence that follows, and how it is an investment with aligned interests. After that, I started reaching out to several funders, including Sarah.
I settled on three funders to consider more closely. They were generally selected due to responsiveness and clarity. Being new to the litigation finance world, I was not looking for any specific terms in the agreement. I wanted to provide our Board with options. Overall, the proposals between funders were similar. One funder proposed a substantial monetization payment, which I personally liked. However, our Board liked the clarity of interactions with individuals from Omni Bridgeway, which is who ultimately funded us. They also liked the patent litigation experience of the team at Omni Bridgeway.
From an SME’s perspective, what advantages does litigation finance bring, beyond the obvious funding of meritorious claims?
Personally, I think that the litigation finance industry is of huge value to SMEs and anyone else who has enforceable rights. Hopefully the Small Business Administration (SBA) embraces it!
The industry should help strengthen the value of rights owned by SMEs. For example, contractual rights are more meaningful and valuable if enforcement is not linked to whether a company has cash to support litigation. I think the biggest help, however, relates to patent enforcement, which becomes attainable for more patent owners.
SilcoTek’s primary reason for obtaining litigation financing was that we felt it would prevent waste. Being an SME and enforcing patent rights against a multi-billion dollar company creates an imbalance and a risk that the other side could try to bleed you dry, even if you are in a position to fund litigation. We felt that public awareness of us receiving litigation financing would reduce that risk created by the imbalance.
When choosing a litigation funder, what concerns you the most? What are the ‘red flags’ you look for when it comes to selecting the appropriate funding partner?
SilcoTek is interested in obtaining a reasonable outcome, whether it be through settlement or going all the way through litigation. Personally, I was concerned that litigation financing was similar to the contingency-based injury-lawyer model, and that is not something that was consistent with our core values. After I understood that it is an investment for a future return, I became more comfortable that it would align with our core values and support our desired outcome.
If there are funders that have the contingency-based injury-lawyer model, that would be a red flag to me; however, all of the funders I communicated with seemed much more sophisticated and seemed like investors.
How can litigation finance help encourage innovation in the SME space and beyond?
Litigation finance can help encourage innovation through its impact on patent rights. It is well-established that patent systems foster innovation, especially the corresponding disclosure of ideas and the increase in access to investment for companies. Patent rights, however, are expensive to enforce.
Without access to litigation finance, some companies will not be able to assert their rights, thereby reducing the value of the patents and ultimately the companies. Without awareness of litigation finance opportunities, some companies will choose to use trade secret law to protect ideas instead of patents, which reduces innovation and technological progress overall (and has a negative economic impact based upon principles from the Solow-Swan economic model showing how GDP is driven by technological progress).
Long-term, providing litigation finance for patent enforcement should increase valuations. This is especially true with techniques based upon relief from royalty calculations, as royalties should be more likely with easier access to funding. Such effects should further drive innovation and technological progress by making such firms more appealing for investment in the future. Ultimately, litigation finance will drive global growth of GDP by driving technological progress.
What are your predictions for how litigation finance will evolve over the coming years?
I think litigation finance will have clearer delineation between stages similar to other investments. It seems that many or all stages are represented right now, albeit without it being easy for outsiders to identify them. More focus will be on early investment with the ability to capture option rights for future investment. Later-stage investment arrangements may also grow. Of course, such changes are going to require adjustments to the expectations of investors and the duration they can expect for returns, but the overall returns could be much higher and the risk could be much lower due to concepts like portfolio theory and real options.
Here is a patent-specific, technology-agnostic effort I began with Innovative Product (IP) Manufacturing, separate from my role at SilcoTek:
- Seed Stage: to support patent drafting and innovation protection before any patent filings.
- Angel Stage: to enhance patent protection while generating early revenue from operations.
- Venture Stage: to enforce issued patents (this seems to be the focus of funders now).
- Mezzanine and Bridge Loans: to drive standards or to establish new standards.
- IPO: to fund sector-specific innovation deployment based upon robust patent portfolios.
Although the Innovative Product (IP) Manufacturing effort is merely at the Seed Stage leading into the Angel Stage, existing interest from funders suggests to me that the litigation finance industry will evolve into more robust support of such efforts. Efforts beyond the Venture Stage may not be necessary in many situations, but broader and bigger opportunities could be anchored by such early-stage rights and the litigation finance industry.
I am sure other similar efforts outside of the patent sector will evolve over the coming years, but the opportunity for fascinating growth within litigation finance is clear to me.
