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Inventor Leverages Litigation Funding to Beat Microsoft

One of the great benefits of third-party legal funding is the ability for small companies and even individuals to fight on a level playing field against the world’s largest corporations. This dynamic was made evident in a recent case, where a US inventor was able to achieve a $10 million award for patent infringement from Microsoft, after enlisting the support of a litigation funder.

Detailed in an article by Bloomberg Law, inventor Michael Kaufman has been in a decade-long struggle to receive compensation, after he alleged that Microsoft infringed his technology patent by using it in their Visual Studios Software. However, it wasn’t until he and attorney Ronald Abramson sought funding from Woodsford Litigation Funding that he was able to take Microsoft to court with previously inaccessible financial resources to fight the case.

Whilst Microsoft initially claimed it had not used the patented product to a significant degree in 2019, lawyers for Abramson discovered that this was only true for the previous year, and Microsoft had in fact been substantially using the product in prior years. After an appeal in federal court, the panel opinion stated that Kaufman should have received royalties from the product usage dating back to 2011.

Whilst victories in patent infringement cases for individual inventors is rare, Nicole Morris, a professor at Emory School of Law, highlighted that in situations where they can receive third-party funding, inventors are determined litigants due to their desire to see their own invention and work recognised.

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UK Court of Appeal Takes Up Key Case on Funder Returns

By John Freund |

A consequential legal battle now before the UK Court of Appeal could have sweeping implications for litigation funders operating in the UK and beyond. The case centers on the enforceability of funding agreements that calculate funder returns as a multiple of the capital invested—a model widely used across the industry.

An article in the Law Gazette outlines how the appeal follows a High Court ruling that refused to strike out a claim challenging such a funding structure. The challenge argues that these agreements, which are not pegged to the damages recovered but instead to the amount of funding provided, could fall afoul of the UK's statutory definition of damages-based agreements (DBAs). If upheld, funders using a multiple-of-capital return model might be required to comply with the more stringent regulatory framework governing DBAs—potentially rendering many existing contracts unenforceable.

The outcome could reverberate across the legal funding landscape, particularly in collective actions, where such return structures are commonly deployed. Industry observers note that a ruling against funders would necessitate a wholesale reevaluation of how litigation finance deals are structured, priced, and disclosed, especially in the UK market.

Funders and legal practitioners alike are closely monitoring the case, viewing it as a test of legal clarity and commercial viability for the sector. The decision may also influence legislative and regulatory discussions already underway in the UK about how best to govern third-party funding.

This case underscores the regulatory and judicial uncertainties that still shadow the legal funding market, even as it matures. A ruling from the Court of Appeal could either reinforce current market practices or trigger a paradigm shift in funder-client agreements.

Case Developments Commercial

Sony and Apple Challenge Enforceability of Litigation Funding Models

By John Freund |

A pivotal UK court case could reshape the future of litigation finance agreements, as Sony and Apple reignite legal challenges to widely used third-party funding models in large-scale commercial disputes.

An article in Law360 reports that the two tech giants are questioning the validity of litigation funding arrangements tied to multibillion-pound cartel claims brought against them. Their core argument: that certain litigation funding agreements may run afoul of UK laws governing damages-based agreements (DBAs), which restrict the share of damages a representative may take as remuneration. A previous Court of Appeal decision in PACCAR Inc. v. Competition Appeal Tribunal held that some funding models might qualify as DBAs, rendering them unenforceable if they fail to comply with statutory rules.

This resurrected dispute centers on claims brought by class representatives against Apple and Sony over alleged anti-competitive behavior. The companies argue that if the funding arrangements breach DBA regulations, the entire claims may be invalidated. For the litigation funding industry, the outcome could severely curtail access to justice mechanisms in the UK—especially for collective actions in competition law, where third-party financing is often essential.

The UK’s Competition Appeal Tribunal previously stayed the proceedings pending clarity on the legal standing of such funding arrangements. With the dispute now heading back to court, all eyes will be on whether the judiciary draws a clear line around the enforceability of funder agreements under current law.

The decision could force funders to rework deal structures or risk losing enforceability altogether. As UK courts revisit the DBA implications for litigation finance, the sector faces heightened uncertainty over regulatory compliance, enforceability, and long-term viability in complex group litigation. Will this lead to a redefinition of permissible funding models—or to a call for legislative reform to protect access to collective redress?

Case Developments Commercial

Funder’s Interference in Texas Fee Dispute Rejected by Appeals Court

By Harry Moran |

A Texas appeals court has ruled that a litigation funder cannot block attorneys from pursuing a fee dispute following a remand order, reinforcing the limited standing of funders in fee-shifting battles. In a 2-1 decision, the First Court of Appeals found that the funder’s interest in the outcome, while financial, did not confer the legal authority necessary to participate in the dispute or enforce a side agreement aimed at halting the proceedings.

An article in Law360 details the underlying case, which stems from a contentious attorney fee battle following a remand to state court. The litigation funder, asserting contractual rights tied to a funding agreement, attempted to intervene and stop the fee litigation between plaintiffs' and defense counsel. But the appellate court sided with the trial court’s decision to proceed, emphasizing that only parties directly involved in the underlying legal work—and not third-party financiers—are entitled to challenge or control post-remand fee determinations. The majority opinion concluded that the funder’s contract could not supersede procedural law governing who may participate in such disputes.

In dissent, one justice argued that the funder’s financial interest merited consideration, suggesting that a more expansive view of standing could be warranted. But the majority held firm, stating that expanding standing would invite unwanted complexity and undermine judicial efficiency.

This decision sends a strong signal to funders operating in Texas: fee rights must be contractually precise and procedurally valid. As more funders build fee recovery provisions into their agreements, questions linger about how far those rights can extend—especially in jurisdictions hesitant to allow funders a seat at the litigation table.