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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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Commercial Regulatory Issues

Congress Debates Litigation Funding Bill

By John Freund |

Republican lawmakers have renewed their push to rein in third-party litigation funding, with a House Judiciary Committee debate highlighting how politically charged the issue has become.

An article in The Daily Signal reports that members of the House Judiciary Committee clashed this week over legislation that would require disclosure of third-party litigation funding arrangements in federal courts. Supporters of the bill framed it as a transparency measure aimed at exposing the financial interests behind major lawsuits, while opponents warned that the proposal risks limiting access to justice and unfairly targeting a growing segment of the legal finance market.

During the committee debate, Republican lawmakers argued that outside investors are increasingly influencing litigation in ways that can distort outcomes and inflate settlement values. Several speakers characterized litigation funders as profit-driven actors operating in the shadows, asserting that judges and defendants deserve to know who stands to benefit financially from a case. Proponents also linked litigation funding to broader concerns about rising legal costs and what they describe as abusive litigation practices.

Democratic members pushed back, questioning whether the bill was designed to solve an actual problem or simply to deter plaintiffs from bringing legitimate claims. Critics of the proposal argued that disclosure requirements could chill funding for complex and expensive cases, particularly those involving individual plaintiffs or smaller businesses facing well-capitalized defendants. They also raised concerns about confidentiality and whether revealing funding arrangements could give defendants a tactical advantage.

The debate reflects a broader national conversation about the role of litigation finance in the civil justice system. While disclosure requirements have already been adopted in certain courts and jurisdictions, the proposed legislation would impose a uniform federal standard. Supporters say this consistency is overdue, while opponents argue it could undermine carefully negotiated funding structures that allow cases to proceed at all.

Commercial

APCIA Supports Federal Litigation Funding Disclosure Bill

By John Freund |

The insurance industry has intensified its campaign for greater scrutiny of third-party litigation funding, with one of its most influential trade groups backing new federal legislation aimed squarely at disclosure.

An article in Insurance Journal reports that the American Property Casualty Insurance Association has thrown its support behind a proposed federal bill that would require parties in civil litigation to disclose the existence of litigation funding agreements. The legislation, which is currently being considered by the House Judiciary Committee, would mandate that courts be informed when a third party has a financial stake in the outcome of a lawsuit. Proponents argue that this information is essential for judges to understand who stands behind a claim and whether outside financial interests may be influencing litigation strategy.

APCIA framed its endorsement around long-standing concerns about rising litigation costs and what insurers describe as “social inflation.” According to the group, undisclosed litigation funding arrangements can drive up claim severity, prolong disputes, and ultimately increase costs for insurers and policyholders alike. By requiring transparency, APCIA believes courts would be better positioned to manage conflicts of interest, assess discovery disputes, and evaluate settlement dynamics.

The association has been an active voice in the national debate over litigation finance for several years, often aligning with other insurance and business groups calling for disclosure regimes at both the state and federal level. APCIA leadership emphasized that the proposed legislation is not intended to ban or restrict litigation funding outright, but rather to ensure that judges and opposing parties have visibility into financial relationships that could bear on a case.

The bill would apply broadly in federal courts and could have significant implications for how funded cases are litigated, particularly in complex commercial disputes and class actions where third-party capital is more common. Insurers view federal action as a way to establish consistency across jurisdictions, rather than relying on a patchwork of state rules and local practices.

Commercial Regulatory Issues

Why Big Law Is Walking Away From Suits Against Governments

Elite global law firms are increasingly declining to pursue massive claims against sovereign states, even when potential recoveries run into the billions. The trend reflects a reassessment inside Big Law of the risk, cost, and strategic value of investor state and public law disputes that can take years to resolve and often carry significant political and reputational complications.

An article in Law.com International reports that top-tier firms which once dominated investor state arbitration and other government facing disputes are now far more selective about taking on such matters. Lawyers interviewed for the piece point to a combination of commercial pressure, client demands, and internal firm dynamics that make these cases less attractive than they once were. Although headline damages can be enormous, the cases typically require years of work, large multidisciplinary teams, and significant upfront investment with no guarantee of recovery.

Another key factor is reputational risk. Firms are increasingly cautious about being seen as adversaries of governments, particularly in sensitive jurisdictions or disputes involving public policy, natural resources, or infrastructure. Partners noted that political backlash, enforcement uncertainty, and the potential impact on other client relationships all weigh heavily when firms decide whether to proceed.

The article also highlights that many corporate clients are less willing to bankroll these disputes directly. Budget scrutiny has intensified, and companies facing disputes with states are often reluctant to commit tens of millions in legal fees over a long time horizon. This dynamic has contributed to a rise in alternative fee arrangements and third party litigation funding, though even those tools do not fully offset the burden for law firms carrying significant work in progress.

As a result, specialist boutiques and arbitration focused firms are increasingly stepping into the space once dominated by global giants. These smaller players often have lower overhead, deeper niche expertise, and a greater tolerance for the long timelines associated with sovereign disputes.