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Intellectual Property Private Credit (Part 2 of 2)

The following article is part of an ongoing column titled ‘Investor Insights.’ 

Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance. 

Executive Summary

  • Despite its size, the Intellectual property (“IP”) asset class has eluded the attention of most asset managers due to its underlying legal complexities
  • Litigation finance industry understands the opportunity, but it is solely focused on litigation involving IP
  • A void exists in the financing market, which IP-focused Private Credit managers have begun to fill via credit-oriented strategies designed to drive value maximization

Slingshot Insights:

  • Secular shifts in the economy have made IP assume an increasing share of corporate value
  • IP is an emerging asset class that has begun to garner the attention of asset managers and insurers
  • There are various IP-centric investment strategies that do not involve litigation.
  • IP-focused Private Credit funds approach IP in a holistic fashion, leveraging numerous ways that IP creates value
  • Investors need to be aware that investing in IP presents unique risks that warrant input from operational and legal IP specialists
  • IP Credit provides a different risk/reward profile for investors, as compared to commercial litigation finance which tends to have more quasi-binary risk

In the part 1 of this two-part series, the relatively nascent asset class of Intellectual Property Private Credit (“IP Credit”) was introduced.  That article explored the basic premise of the asset class, discussed some of the financiers in the space and reviewed some of the nuances inherent in the asset class.  In part two, we take all of the knowledge gained in part one and apply it to a specific example by exploring a publicly traded company, which used IP Credit on a couple of different occasions with great success.

Case Study

The details of most IP Private Credit transactions remain private.  An illustrative exception involves two prior financings of the once publicly traded cybersecurity company Finjan Holdings, Inc. (NASDAQ: FNJN) (“Finjan”), known for its technologies related to proactive cybersecurity.  At the time of the financings in 2016 and 2017, Finjan had focused significant effort on the licensing of its patent portfolio — to significant monetary success — in addition to other aspects of its business.  But because the licensing of intellectual property often requires costly litigation to complement the negotiation process, Finjan, through its bankers, ran a process to identify a strategic capital partner.  Potential proceed uses included litigation and general operating expenses, as well as stock repurchases.

Series A Financing (May 20, 2016)

InvestmentSeries A Preferred StockInvestorsHalcyon/Soryn
Amount$10.2 millionTerms
  • Optional and mandatory redemptive provisions
  • Carry participation rights in revenue streams
  • Negative Events – Litigation and Treasury events
  • Consent to declare dividends
Source: https://www.sec.gov/Archives/edgar/data/0001366340/000136634016000051/0001366340-16-000051-index.htm

Series A1 Financing (June 19, 2017)

InvestmentSeries A Preferred StockInvestorsHalcyon/Soryn
Amount$15.3 millionTerms
  • Optional and mandatory redemptive provisions
  • Carry participation rights in revenue streams
  • Negative Events – Litigation and Treasury events
  • Consent to declare dividends
Redemption RightsCompany option to redeem at lesser of:

1.     2.8 X Original Purchase Price
2.     Purchase prices ranging from 1.2375X to 1.575+ times based on time elapsed from date of issuance
3.     Receipt of share of proceeds from litigation or licensing which varies based on time elapsed from date of issuance

Source: https://www.sec.gov/Archives/edgar/data/0001366340/000136634017000059/0001366340-17-000059-index.htm

Based on its prior patent licensing success, Finjan likely had numerous traditional, non-recourse litigation financing offers to choose from. But instead of pursuing the litigation finance route, Finjan pursued the IP Credit path.  Finjan secured almost $26mm in financing, via two highly-structured preferred equity transactions.  These transactions featured share redemptions tied to litigation and/or patent licensing revenue events, and also contained “Negative Event” features that entitled the capital partner to recover all of their shares upon the occurrence of certain, pre-agreed negative events.  As illustrated in the chart above, the capital partner’s potential returns were capped at multiples ranging from 1.25 to almost 3x the original purchase price of the shares, with the range depending mainly on the length of time the capital was outstanding.

Finjan ultimately exited both deals.  While the exact motivations behind the deal cannot be known, it is easily theorized that the highly-structured and downside protected nature of the IP Credit Deal the company ultimately entered into was favorable in a number of respects compared to the higher cost of capital seen in traditional litigation finance arrangements.  Finjan was ultimately acquired by Fortress Investment Group in 2020.

Interplay with IP litigation

Of note, and particularly with respect to patents, enforcement litigation is often a necessary tool to resolve licensing disputes or negotiations between IP owners and potential licensees.   The reason is that without litigation, a patent owner has no means to force a party that it believes is infringing its IP to the negotiating table.

Litigation scenarios thus remain part of the broader IP Private Credit strategy.  But such litigations can take different shapes and risk profiles.  On one end of the risk spectrum are single event litigations, involving a small number of patents, that represent unattractive and binary risk profiles.  On the other end of the spectrum are multi-venue disputes, involving a significant number of patents, brought by entities owning much larger patent portfolios than what is asserted in litigation.

These types of situations (shown above to the right of the arrow) resemble business negotiations moreso than binary litigation, and can be modeled to resolve in a more predictable fashion.  By the nature of a credit-oriented investment strategy, an IP-focused Private Credit fund targets the latter opportunity set, whereas the litigation finance market has shown a willingness to fund what we characterize as the riskier, more binary type enforcement situations.

Accordingly, while litigation is not necessarily an outcome that results from such an investment, a manager that invests in the sector does need to expect, plan and prepare for litigation as a potential outcome, or at the very least as a means to an end. The idea, as with most litigation, is that ‘saner heads will prevail’ and that a commercially reasonable settlement will be achieved by both parties prior to embarking on expensive litigation.  Of course, this means that the onus is on the investor to understand the merits of the case and the plaintiff’s strategic position, potential defenses, procedural activities that could frustrate or delay litigation, and the costs associated therewith.  The complexities associated with understanding the value of intellectual property assets, and the complexity of the litigation process, make the sector a highly specialized area for investors who are often best served by investing with or alongside specialist managers.

 Slingshot Insights

Secular shifts in the economy should be forcing investors to think about value in different ways.  It’s indisputable that intellectual property is clearly the basis for technology company valuations, and therefore value must be attributable to IP when considering financing alternatives.  While understanding the value inherent in intellectual property can be difficult, fund managers with specific expertise exist to allow investors to allocate capital in an appropriate risk adjusted manner.

The fact that the insurance industry is now providing insurance products geared toward intellectual property is a testament to how far the industry has come and how significant the opportunity is, and perhaps much less risky than one would think, if approached prudently.

I believe the IP Credit asset class has a bright future, as existing players have had great success producing consistent returns in a sector that one might otherwise believe to be volatile.

As always, I welcome your comments and counter-points to those raised in this article.

 Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.  Slingshot Capital inc. is involved in the origination and design of unique opportunities in legal finance markets, globally, investing with and alongside institutional investors.

Soryn IP Capital Management LLC (“Soryn”) is an investment management firm focused on providing flexible financing solutions to companies, law firms and universities that own and manage valuable intellectual property (“IP”) assets.  Soryn’s approach employs strategies, including private credit, legal finance, and specialty IP finance, which enable it to invest across a diversity of unique IP-centric opportunities via investments structured as debt, equity, derivatives, and other financial contracts.  The Soryn team is comprised of seasoned IP and investment professionals, allowing the firm to directly source opportunities less travelled by traditional alternative asset managers.

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Commercial People Moves

Therium Cuts UK Jobs as Part of Strategic Reorganisation

By Harry Moran |

Recent years have been described as a time of substantial growth and expansion in the global litigation funding market, yet new reporting suggests that one of the industry’s most well-known funders is downsizing its workforce.

An article in The Law Society Gazette provides a brief insight into ongoing changes being made at litigation funder Therium, reporting that the company is undertaking a number of layoffs as part of plans to restructure the business. The article states that these job cuts have been made to Therium’s UK workforce, with the business claiming the cuts are motivated by strategic reorganisation rather than financial pressures. 

There are no details currently available as to which employees have been let go, with Therium having removed the ‘Our People’ section of its website. The Gazette also discovered the incorporation of a new company called Therium Capital Advisors LLP on 15 April 2025, through a review of Companies House records. The new entity’s records list Therium’s chief investment officer, Neil Purslow, and investment manager, Harry Stockdale, as its two designated members. 

Companies House records also show that Therium filed a ‘termination of appointment of secretary’ for Martin Middleton on 19 March 2025. Mr Middleton’s LinkedIn profile currently lists his position as Therium’s chief financial officer, having first joined the funder as a financial controller over 15 years ago.

At the time of reporting, Therium has not responded to LFJ’s request for comment.

Commercial Special Features

Litigation Funding in GCC Arbitration

By Obaid Mes’har |

The following piece was contributed by Obaid Saeed Bin Mes’har, Managing Director of WinJustice.

Introduction

A Practical Overview

Third-party litigation funding (TPF)—where an external financier covers a claimant’s legal fees in exchange for a share of any resulting award—has gained significant traction in arbitration proceedings across the Gulf Cooperation Council (GCC). Historically, TPF was not widely used in the Middle East, but recent years have seen a notable increase in its adoption, particularly in the United Arab Emirates (UAE). The economic pressures introduced by the COVID-19 pandemic, coupled with the high costs of complex arbitrations, have prompted many parties to view TPF as an effective risk-management strategy. Meanwhile, the entry of global funders and evolving regulatory frameworks highlight TPF’s emergence as a key feature of the GCC arbitration landscape.

Growing Adoption

Although the initial uptake was gradual, TPF is now frequently employed in high-value disputes across the GCC. Observers in the UAE have noted a discernible rise in funded cases following recent legal developments in various jurisdictions. Major international funders have established a presence in the region, reflecting the growing acceptance and practical utility of TPF. Similar growth patterns are evident in other GCC countries, where businesses have become increasingly aware of the advantages offered by third-party financing.

By providing claimants with the financial resources to pursue meritorious claims, third-party funding is reshaping the dispute-resolution landscape. As regulatory frameworks evolve and more funders enter the market, it is anticipated that TPF will continue to gain prominence, offering both claimants and legal professionals an alternative means of managing arbitration costs and mitigating financial risk.

Types of Cases

Funders are chiefly drawn to large commercial and international arbitration claims with significant damages at stake. The construction sector has been a key source of demand in the Middle East, where delayed payments and cost overruns lead to disputes; contractors facing cash-flow strain are increasingly turning to third-party funding to pursue their claims. High-stakes investor–state arbitrations are also candidates – for instance, in investment treaty cases where a government’s alleged expropriation deprives an investor of its main asset, funding can enable the claim to move forward . In practice, arbitration in GCC hubs like Dubai, Abu Dhabi, and others is seeing more funded claimants, leveling the field between smaller companies and deep-pocketed opponents.

Practical Utilization

Law firms in the region are adapting by partnering with funders or facilitating introductions for their clients. Many firms report that funding is now considered for cases that clients might otherwise abandon due to cost. While precise data on usage is scarce (as most arbitrations are confidential), anecdotal evidence and market activity indicate that third-party funding, once rare, is becoming a common feature of significant arbitration proceedings in the GCC. This trend is expected to continue as awareness grows and funding proves its value in enabling access to justice.

Regulatory Landscape and Restrictions on Third-Party Funding

UAE – Onshore vs. Offshore

The United Arab Emirates illustrates the region’s mixed regulatory landscape. Onshore (civil law) UAE has no specific legislation prohibiting or governing litigation funding agreements . Such agreements are generally permissible, but they must not conflict with Sharia principles – for example, funding arrangements should avoid elements of excessive uncertainty (gharar) or speculation . Parties entering funding deals for onshore cases are cautioned to structure them carefully in line with UAE law and good faith obligations. In contrast, the UAE’s common-law jurisdictions – the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) – explicitly allow third-party funding and have established clear frameworks.

The DIFC Courts issued Practice Direction No. 2 of 2017, requiring any funded party to give notice of the funding and disclose the funder’s identity to all other parties . The DIFC rules also clarify that while the funding agreement itself need not be disclosed, the court may consider the existence of funding when deciding on security for costs applications and retains power to order costs against a funder in appropriate cases. Similarly, the ADGM’s regulations (Article 225 of its 2015 Regulations) and Litigation Funding Rules 2019 set out requirements for valid funding agreements – they must be in writing, the funded party must notify other parties and the court of the funding, and the court can factor in the funding arrangement when issuing cost orders . The ADGM rules also impose criteria on funders (e.g. capital adequacy) and safeguard the funded party’s control over the case .

In sum, the UAE’s offshore jurisdictions provide a modern, regulated environment for third-party funding, whereas onshore UAE allows it in principle but without detailed regulation.

Other GCC Countries

Elsewhere in the GCC, explicit legislation on litigation funding in arbitration remains limited, but recent developments signal growing acceptance. Saudi Arabia, Qatar, Oman, and Kuwait do not yet have dedicated statutes or regulations on third-party funding . However, leading arbitral institutions in these countries have proactively addressed funding in their rules. Notably, the Saudi Center for Commercial Arbitration (SCCA) updated its Arbitration Rules in 2023 to acknowledge third-party funding: Article 17(6) now mandates that any party with external funding disclose the existence of that funding and the funder’s identity to the SCCA, the tribunal, and other parties . This ensures transparency and allows arbitrators to check for conflicts. 

Likewise, the Bahrain Chamber for Dispute Resolution (BCDR) included provisions in its 2022 Arbitration Rules requiring a party to notify the institution of any funding arrangement and the funder’s name,, which the BCDR will communicate to the tribunal and opponents . The BCDR Rules further oblige consideration of whether any relationship between the arbitrators and the funder could compromise the tribunal’s independence. These rule changes in Saudi Arabia and Bahrain align with international best practices and indicate regional momentum toward formal recognition of third-party funding in arbitration.

Disclosure and Transparency

A common thread in the GCC regulatory approach is disclosure. Whether under institutional rules (as in DIAC, SCCA, BCDR) or court practice directions (DIFC, ADGM), funded parties are generally required to disclose that they are funded and often to reveal the funder’s identity . For instance, the new DIAC Arbitration Rules 2022 expressly recognize third-party funding – Article 22 obliges any party who enters a funding arrangement to promptly inform all other parties and the tribunal, including identifying the funder. DIAC’s rules even prohibit entering a funding deal after the tribunal is constituted if it would create a conflict of interest with an arbitrator. This emphasis on transparency aims to prevent ethical issues and later challenges to awards. It also reflects the influence of global standards (e.g. 2021 ICC Rules and 2022 ICSID Rules) which likewise introduced funding disclosure requirements.

Overall, while no GCC jurisdiction outright bans third-party funding, the patchwork of court practices and arbitration rules means parties must be mindful of the specific disclosure and procedural requirements in the seat of arbitration or administering institution. In jurisdictions rooted in Islamic law (like Saudi Arabia), there is an added layer of ensuring the funding arrangement is structured in a Sharia-compliant way (avoiding interest-based returns and excessive uncertainty. We may see further regulatory development – indeed, regional policymakers are aware of litigation funding’s growth and are considering more formal regulation to provide clarity and confidence for all participants .

The GCC region has seen several important developments and trends related to third-party funding in arbitration:

  • Institutional Rule Reforms: As detailed earlier, a number of arbitral institutions in the GCC have updated their rules to address third-party funding, marking a significant trend. The Dubai International Arbitration Centre (DIAC) 2022 Rules, the Saudi SCCA 2023 Rules, and the Bahrain BCDR 2022 Rules all include new provisions on funding disclosures. This wave of reforms in 2022–2023 reflects a recognition that funded cases are happening and need basic ground rules. By explicitly referencing TPF, these institutions legitimize the practice and provide guidance to arbitrators and parties on handling it (primarily through mandatory disclosure and conflict checks). The adoption of such rules brings GCC institutions in line with leading international forums (like ICC, HKIAC, ICSID, etc. that have also moved to regulate TPF).
  • DIFC Court Precedents: The DIFC was one of the first in the region to grapple with litigation funding. A few high-profile cases in the DIFC Courts in the mid-2010s involved funded claimants, which prompted the DIFC Courts to issue Practice Direction 2/2017 as a framework. This made the DIFC one of the pioneers in the Middle East to formally accommodate TPF. Since then, the DIFC Courts have continued to handle cases with funding, and their decisions (for example, regarding cost orders against funders) are building a body of regional precedent on the issue. While most of these cases are not public, practitioners note that several DIFC proceedings have featured litigation funding, establishing practical know-how in dealing with funded parties. The DIFC experience has likely influenced other GCC forums to be more accepting of TPF.
  • Funders’ Increased Presence: Another trend is the growing confidence of international funders in the Middle East market. Over the last couple of years, top global litigation financiers have either opened offices in the GCC or actively started seeking cases from the region. Dubai has emerged as a regional hub – beyond Burford, other major funders like Omni Bridgeway (a global funder with roots in Australia) and IMF Bentham (now Omni) have been marketing in the GCC, and local players or boutique funders are also entering the fray . This increased competition among funders is good news for claimants, as it can lead to more competitive pricing and terms for funding. It also indicates that funders perceive the GCC as a growth market with plenty of high-value disputes and a legal environment increasingly open to their business.
  • Types of Arbitrations Being Funded : In terms of case trends, funded arbitrations in the GCC have often involved big-ticket commercial disputes – for example, multi-million dollar construction, energy, and infrastructure cases. These are sectors where disputes are frequent and claims sizable, but claimants (contractors, subcontractors, minority JV partners, etc.) may have limited cash after a project soured. Third-party funding has started to play a role in enabling such parties to bring claims. There have also been instances of investor-state arbitrations involving GCC states or investors that utilized funding (though specific details are usually confidential). The Norton Rose Fulbright report notes that funding is especially helpful in investor-treaty cases where an investor’s primary asset was taken by the state, leaving them dependent on external financing to pursue legal remedies.

As GCC countries continue to attract foreign investment and enter into international treaties, one can expect more ICSID or UNCITRAL arbitrations connected to the region – and many of those claimants may turn to funders, as is now common in investment arbitration globally.

  • Emerging Sharia-Compliant Funding Solutions: A unique trend on the horizon is the development of funding models that align with Islamic finance principles. Given the importance of Sharia law in several GCC jurisdictions, some industry experts predict the rise of Sharia-compliant litigation funding products. These might structure the funder’s return as a success fee in the form of profit-sharing or an award-based service fee rather than “interest” on a loan, and ensure that the arrangement avoids undue uncertainty. While still nascent, such innovations could open the door for greater use of funding in markets like Saudi Arabia or Kuwait, by removing religious/legal hesitations. They would be a notable evolution, marrying the concept of TPF with Islamic finance principles – a blend particularly suitable for the Gulf.

Overall, the trajectory in the GCC arbitration market is clear: third-party funding is becoming mainstream. There have not been many publicly reported court challenges or controversies around TPF in the region – which suggests that, so far, its integration has been relatively smooth. On the contrary, the changes in arbitration rules and the influx of funders point to a growing normalization. Businesses and law firms operating in the GCC should take note of these trends, as they indicate that funding is an available option that can significantly impact how disputes are fought and financed.

Conclusion

Litigation funding in the GCC’s arbitration arena has evolved from a novelty to a practical option that businesses and law firms ignore at their peril. With major arbitration centers in the region embracing third-party funding and more funders entering the Middle Eastern market, this trend is likely to continue its upward trajectory. 

For businesses, it offers a chance to enforce rights and recover sums that might otherwise be forgone due to cost constraints. For law firms, it presents opportunities to serve clients in new ways and share in the upside of successful claims. Yet, as with any powerful tool, it must be used wisely: parties should stay mindful of the legal landscape, comply with disclosure rules, and carefully manage relationships to avoid ethical snags. 

By leveraging litigation funding strategically – balancing financial savvy with sound legal practice – stakeholders in the GCC can optimize their dispute outcomes while effectively managing risk and expenditure. In a region witnessing rapid development of its dispute resolution mechanisms, third-party funding stands out as an innovation that, when properly harnessed, aligns commercial realities with the pursuit of justice.

At WinJustice.com, we take pride in being the UAE’s pioneering litigation funding firm. We are dedicated to providing innovative funding solutions that enable our clients to overcome financial hurdles and pursue justice without compromise. By leveraging third-party litigation funding strategically—balancing financial acumen with sound legal practices—stakeholders in the GCC can optimize their dispute outcomes while effectively managing risk and expenditure.

If you are looking to maximize your dispute resolution strategy through expert litigation funding, contact WinJustice.com today. We’re here to help you navigate the evolving landscape and secure the justice you deserve.

Case Developments Commercial

European Commission Fines Apple €500m and Meta €200m for DMA Breaches

By Harry Moran |

Antitrust and competition claims brought against large multinational corporations often represent lucrative opportunities for litigation funders, and the announcement of a new series of fines being imposed on two of the world’s largest technology companies could set the stage for more of these claims being brought in Europe.

Reporting by Reuters covers a major antitrust development as the European Commission has handed down multimillion dollar fines to both Apple and Meta over their breaches of the Digital Markets Act (DMA). These fines follow non-compliance investigations that began in March 2024, with Apple receiving a €500 million fine for breaching its anti-steering obligation through the App Store, and Meta being fined €200 million for breaching the DMA obligation to allow consumers the option to choose a service that uses less of their personal data.

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition at the European Commission, said that the fines “send a strong and clear message”, and that the enforcement action should act as a reminder that “all companies operating in the EU must follow our laws and respect European values.”

In a post on LinkedIn, Gabriela Merino, case manager at LitFin, explained that these fines “mark the first non-compliance decisions issued by the Commission under the new regulatory framework.” As LFJ covered earlier this month, LitFin is funding a €900 million claim against Google in the Netherlands over its anti-competitive practices that were first brought to light by another European Commission investigation. Merino said that “these latest rulings are a welcome boost” to LitFin’s own case.

Statements from both Apple and Meta decried the fines, with the former arguing that the decision was “yet another example of the European Commission unfairly targeting Apple”. 

The full press release from the European Commission detailing the investigations and associated fines can be read here.