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Litigation Funding in Brazil Could Explode After 231,000 Patents Are Granted to Reduce Backlog

January 15, 2018

Litigation Funding in Brazil Could Explode After 231,000 Patents Are Granted to Reduce Backlog

For the past 15 years, Brazil has suffered one of the world’s most chronic and severe backlogs of pending patents. Now, the Brazilian Patent and Trademark Office (PTO), is looking to reduce that backlog in one fell swoop: by granting patent rights until 2020 to 231,000 pending applications with no examination. The Brazilian government is seeking to introduce this emergency measure as an “extraordinary solution” to the crisis that has plagued the nation’s patent market for a generation. Brazil’s patent problems arose after it enacted the Patent Statute in 1996, making the nation TRIPS compliant and expanding its range of patentable products and industries. As a result, the number of patent filings has increased 200% over the last 15 years, without a corresponding increase in PTO examiners. Brazil’s current average waiting time for all technological patents is over 10 years. For pharmaceutical and telecom patents, the average wait time is over 13 years. According to the PTO, the current number of examiners (326) is sufficient to handle the present influx of new filings, however it is the backlog that is keeping the PTO in check. Therefore, the PTO has floated the idea that 231,000 pending patents within the backlog (not including pharma patents, which are covered by a separate regulatory body) be immediately granted with no examination required. Here’s where things get tricky, however: a third party would maintain the right to file a pre-grant opposition within 90 days of the automatic patent filing. Should a pre-grant filing take place, the patent application would automatically be reviewed by the PTO. Companies could then theoretically check the automatic patent application list for competitor patents, and file a pre-grant opposition in order to remove their competitors’ patents from the queue. Of course, that type of action would require an upfront legal spend. Perhaps this is an area that astute litigation funders in the market could pursue– There is additional concern, of course, that patents granted via the automatic waiver may in the long run be vulnerable to invalidity challenges in post-grant opposition, as well as the Federal Courts. Local and state judges may also be reluctant to enforce patent decisions in cases involving patents obtained through automatic application. The PTO itself is not beyond judicial reproach; there have already been numerous lawsuits against the PTO grounded on the unlawfulness of the lengthy backlog, which have successfully compelled the PTO to examine a patent application by means of a court order. So it’s not a given that the PTO’s automatic grant will be accepted by state and even federal courts. Again, these are all nitty-gritty details that could play out in the litigation finance industry’s favor, should the PTO move ahead with its suggested ‘extraordinary solution.’

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Pravati Capital Partners with SEI to Bring Litigation Finance to Registered Investment Advisors

By John Freund |

One of the oldest litigation finance firms in the United States has announced a strategic partnership aimed at expanding mainstream investor access to the asset class.

As reported by Business Wire via Yahoo Finance, Scottsdale-based Pravati Capital has partnered with financial services firm SEI to provide registered investment advisors with structured access to litigation finance as an alternative investment option. The collaboration will leverage SEI's distribution platform to make litigation funding opportunities available within advisor portfolios.

The partnership reflects growing institutional interest in litigation finance as an alternative asset class. Historically, litigation funding has been difficult for mainstream financial advisors to access on behalf of their clients, with the market largely dominated by specialized funds and institutional investors. The Pravati-SEI arrangement seeks to bridge that gap by creating a more accessible pathway for advisors seeking diversification through non-correlated investments.

The announcement underscores a broader industry shift as litigation finance continues to move from a niche strategy toward greater acceptance within traditional wealth management channels. As the global litigation funding market grows — projected to reach over $25 billion in 2026 — partnerships like this one may signal a new phase of institutional adoption.

Commercial Regulatory Issues

UK Litigation Funding Expert Calls for Mandatory Legal Expenses Insurance in Testimony to MPs

By John Freund |

A leading UK litigation funding expert has urged Parliament to consider making legal expenses insurance compulsory for all citizens as a means of improving access to justice.

As reported by Legal Futures, Dr. John Sorabji — co-chair of the Civil Justice Council working party on litigation funding and former principal legal adviser to the Lord Chief Justice — told the Justice Select Committee that mandatory LEI coverage deserves serious consideration. He acknowledged the recommendation is a personal view rather than an official CJC position.

Currently, LEI take-up in England stands at just 8 percent and 13 percent in Wales, compared to 95 percent in Sweden and 35 percent in Germany. Justice Select Committee chair Andy Slaughter suggested public reluctance may stem from a perception that LEI is "a rip-off."

Dr. Sorabji also urged the government to introduce retrospective legislation reversing the Supreme Court's PACCAR judgment, which classified litigation funding arrangements as damages-based agreements — a ruling that has significantly disrupted the UK funding market. The testimony comes as Parliament continues to examine structural barriers to civil justice and the role that both insurance and litigation funding play in enabling access to the courts.

Commercial Regulatory Issues

Illinois Lawmaker Introduces Bill to Regulate Third-Party Litigation Funding

By John Freund |

An Illinois state legislator has introduced new legislation aimed at bringing transparency and consumer protections to the state's growing third-party litigation funding market.

As reported by AOL, State Rep. Dan Ugaste, R-Geneva, filed HB5244, which would require disclosure of third-party lawsuit funders, block foreign interests from financing domestic litigation, prevent funders from steering cases or pressuring settlements, and cap investor returns to ensure plaintiffs receive the majority of recoveries.

"If you are going to profit from lawsuits filed in Illinois, you shouldn't be allowed to hide in the shadows," Ugaste said. The bill, he added, "creates basic rules to ensure outside funders aren't steering cases."

Katie Reilly, Executive Director of the Illinois Coalition for Legal Reform, noted that "commercial third-party litigation funding has grown quickly, but Illinois law has not kept pace." The organization expressed support for the measure.

Similar legislation has already passed in Wisconsin and Indiana. However, HB5244 faces uncertain prospects in the Democrat-dominated Illinois General Assembly, where trial lawyers who benefit from third-party financing have historically donated millions to state Democrats. The bill reflects a broader national trend of state-level efforts to impose guardrails on the rapidly expanding litigation funding industry.