
At Lumenci, we provide turnkey solutions to generate value from patent assets. What started as a technical consulting team has, over time, evolved into a team of like-minded experts, engineers, and deal makers who find innovative ways to commercialize the value of the patents.
We frequently engage with deep-tech companies (and their investors) with sizeable patent portfolios that want to understand and estimate the value of their patents, which requires thoroughly examining their patent portfolio, deep diving into the invention/inventor story, and identifying assets that can generate maximum returns. This could also mean assisting the client in developing patents and selecting the best out of the lot for monetization. Our analysis and strategies to customers drive tangible value out of intangible assets, with more tech companies becoming more aware of the value of intellectual property. Our global clientele is now expanding with more requirements on the ‘how’ than the ‘what.’
How does Lumenci help patent owners, law firms, and litigation funders during IP litigation?
Lumenci has supported AMLaw100 law firms in over 175 patent litigation matters, on both plaintiff and defense, across the US, EU, China, India, and Brazil, and has helped generate over $3B in verdicts, settlements, licensing revenues, and cost savings. Our team has successfully represented as technology consultants in high-stakes patent litigation lifecycle in creating high-quality litigation grade claim charts, drafting complaints, investigating confidential source code under the protective order, documentation review, expert reports prep, and supporting our law firm customers during deposition and trial.
Lumenci’s vast experience of supporting multiple high-stakes cases through the trial is beneficial to patent owners in not only validating the merits of a patent portfolio from a technology and valuation standpoint but also getting a turnkey solution to craft the right story, raise capital via litigation funding or insurance, engage with law firms, and get insights throughout the commercialization lifecycle.
Our experts advise litigation funders with in-depth technology and valuation due diligence and help them identify the risks of a potential investment. Our experience with litigation funders has yielded them to mitigate high investment risks by identifying the underlying potential of patent assets, the risk of a commercialization campaign, and strategies on how to mitigate them.
What is the role of due diligence and technical analysis in the patent litigation lifecycle?
Foundational, to sum it up in a word.
Lumenci conducts due diligence on the company’s patent assets, highlighting relevance w.r.t technology evolution, assessing validity w.r.t section patentable subject matter, novelty and obviousness, scoping enforceability across the industry, and outlining the damages potential. This process becomes integral to the initial stages of a patent commercialization process. In addition, venue consideration is an important aspect of the diligence. This due diligence forms the basis of building infallible evidence, which is critical in supporting a high-stakes commercialization campaign.
How does the technical analysis process work? Are you able to analyze any technical domain?
We support high-stakes patent commercializing and litigation campaigns from day 1 through trial and specialize in technology domains like Software, Telecom/Networking, Semiconductors, and Medical Devices. We support our law firm customers in maintaining and constantly upgrading the state of infringement or non-infringement evidence, and validity or invalidity evidence as a case progresses by analyzing source code, reverse engineering hardware, testing prior art systems, and conducting complex testing of telecom/networking devices. Lumenci is well known in the industry for "illuminating innovation”, i.e. finding key pieces of evidence which can be material in affecting the outcome of a case, on both the plaintiff and defense side.
What trends are you seeing in the patent space that is relevant to litigation funders specifically, and how does Lumenci's service fit into those trends?
As litigation costs, especially in the US, continue to increase, the level of pre-intake diligence by the litigation funders also continues to increase. For the funders, this means having access to or relationships with technical and damages diligence teams that can provide priority and prompt support to their diligence needs is essential. The litigation funders that have these relationships ironed can out-compete their peers in terms of speed and depth of decision-making. Lumenci with its trained teams in various parts of the patent monetization and litigation cycle in over 10 countries, offers this depth and speed that is virtually unmatched at scale.
Despite the rising interest rates and dire macroeconomic conditions, the growing number of litigation cases and the emerging secondary market for litigation finance claims highlight the pertinence of litigation funding. Litigation funders are particularly interested in understanding the underlying potential of patent assets and mitigation potential before investing in a case. Additionally, operating technology companies continue to find creative ways to generate revenue and many patent assets are coming to the market which have little to no diligence done on them. Lumenci’s in-depth expertise in technical due diligence, validity assessment, damages assessment, and experience in handling high-stakes patent litigation matters are highly valued by litigation funders and insurance underwriters in making informed decisions on their investments in patent asset commercialization campaigns.
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:
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.
LegalPay is the only company in India which provides different financing solutions to businesses for their legal services and/or litigations. Founded by Kundan Shahi in 2019, LegalPay now has a team of more than 100 staff managing more than USD 400 million of claims under management.
Kundan Shahi is an alumnus of IIM Bangalore's startup incubator, NSRCEL and had perviously founded a LegalTech company. He deeply believes in relieving the burden on Indian judiciary, and to further that cause he supports Bharat Disputes Resolution (BDR), India’s largest online dispute resolution platform.
Below is our conversation with Mr. Shahi:What is the litigation funding landscape like in India? What are the unique challenges and opportunities for funders operating there?
At present, litigation finance in India is at an embryonic stage, reflective of its burgeoning legal expense market. A combined total of around 40 billion dollars encompasses both individual and business legal expenditures, a figure poised for further escalation with the country's rapid economic expansion and the surge in cross-border transactions. The imminent ascension of India to become the world's third-largest economy is projected to further amplify the legal expense market's growth. Distinguishing India from other jurisdictions is the absence of a contingency fee model, necessitating the demand for alternative financing avenues. The concept of third-party funding (TPF) was initially alien to the legal landscape, often perceived as illicit by legal practitioners. The awareness around litigation finance has been minimal until recently.
What types of cases does LegalPay fund? What case aspects do you look for? What are some of the things you look to stay away from?
LegalPay has made substantial investments to cultivate awareness within the business sphere, elucidating the financial dimensions of litigation. This concerted effort has yielded a notable increase in litigation finance inquiries from businesses. In contrast to conventional jurisdictions where stakeholder interests are aligned (plaintiff, lawyer, funders), in India, only funders and plaintiffs share a common interest. We are a low trust society with price sensitivity. Consequently, possessing deep pockets alone does not guarantee access to lucrative opportunities. To navigate this landscape, an innovative blend of technology and distribution strategies is imperative for robust deal origination.
One of the major concerns for funders is case duration. India is not known for speedy case resolutions. How do you manage this risk factor?
The reputation of India's judicial system for protracted case resolutions is acknowledged, yet empirical data reveals incremental improvements. While perceptions linger, the expansive realm of disputes provides ample room for astute selection. Adaptation is key in this price-sensitive climate; prioritizing plaintiff interests ensures risk management remains a cornerstone. Businesses have started understanding the financial perspective of litigation which encourages them to opt for alternative disputes resolutions.
You recently launched Contract Defense, a free service protecting businesses from disputes arising from BNPL. What can you tell us about this?
Our recent introduction of "Contract Defense" serves to bolster trust and provide businesses with a safety net against disputes arising from the contract bought using our framework. This innovative offering extends an interest-free credit line to manage legal expenses and covers initial legal costs stemming from contractual agreements facilitated through our BNPL platform. This engagement serves as a prelude to forging robust relationships, positioning us to offer litigation finance when needed. To use Contract Defense, all the customer needs to do is create a contract through any lawyer or law firm in India and pay for it using our BNPL payment method. If any legal disputes arising from the contract, the customer can simply transfer the legal expense to LegalPay, and we will cover the cost of all possible disputes.
What are your predictions for the future of litigation funding in India? How will this market evolve?
Forecasts for the litigation funding landscape in India remain resoundingly positive. As awareness burgeons, businesses are keen to transfer the financial risk of litigation to platforms such as ours. The aftermath of a Delhi High Court judgment has triggered heightened discussions and inquiries, attracting international funders and law firms seeking symbiotic collaborations. The expansive market paves the way for coexistence and flourishing among several prominent litigation funders, contingent upon their adept adaptation to the intricacies of the Indian landscape.
In conclusion, the canvas of litigation funding in India is unfolding with remarkable potential. The convergence of economic growth, legal dynamics, and the desire for risk transfer converge to paint a promising trajectory for this evolving sector.
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