Disclosure Trends in Patent Litigation Funding — What You Need to Know
Note: Protego, LLC is not a law firm. This content is for general informational purposes only and should not be relied upon as legal, financial, or tax advice. See full disclaimer at the end of this article.
As third-party litigation funding becomes more common in patent disputes, courts and legislators are paying increasing attention to transparency requirements. Here is a general overview of what patent owners considering litigation funding should know about the evolving disclosure landscape.
Federal Courts Are Increasing Disclosure Requirements
A growing number of federal courts have adopted standing orders or local rules requiring parties to disclose the existence of third-party litigation funding arrangements. As of the date of this publication, jurisdictions that have adopted some form of disclosure requirement include, but are not limited to:
- Northern District of California
- District of New Jersey
- District of Delaware
- Western District of Texas
These courts generally require parties to identify whether a third party has a financial interest in the outcome of the litigation and, in some cases, whether the funder has any influence over litigation decisions such as settlement.
Why Courts Are Requiring Disclosure
The stated rationales behind these disclosure requirements generally include:
- Identifying potential conflicts of interest between funders and parties or counsel
- Promoting transparency in how litigation is being financed and managed
- Helping courts understand who has a meaningful stake in the outcome of the case
Considerations for Patent Owners and Funders
The expansion of disclosure requirements has raised several practical considerations:
- Disclosure may require sharing certain details about the funding arrangement that the patent owner or funder would prefer to keep confidential
- Defendants may attempt to use disclosure as a basis for discovery into the terms of the funding agreement or to create delay
- Early-stage case management may involve additional motion practice related to funding disclosure
Best Practices for Navigating Disclosure Requirements
Patent owners considering litigation funding may want to:
- Work with their attorney to understand the specific disclosure rules applicable to their chosen venue before entering into a funding agreement
- Discuss with both their attorney and their funding partner how to structure communications to comply with disclosure obligations while preserving attorney-client privilege where appropriate
- Choose a funding partner with experience navigating disclosure requirements in patent litigation
Compliance with disclosure requirements does not need to jeopardize a patent owner’s case. With proper preparation and experienced partners, patent owners can navigate these obligations effectively.
Disclaimer
This article is for general informational purposes only and reflects the views of the Protego, LLC (“Protego”) team as of the date of publication. Protego is not a law firm and does not provide legal, financial, investment, or tax advice. Nothing in this article should be construed as or relied upon as professional advice. The information presented may not reflect the most current legal developments, and Protego makes no representations or warranties regarding its accuracy or completeness.
Protego does not guarantee that litigation funding will be obtained or that any particular outcome will result from pursuing patent enforcement. All cases are unique, and results depend on the specific facts and circumstances involved. For advice specific to your situation, please consult a qualified attorney, financial advisor, or tax professional.
Protego has a financial interest in matters it presents to funding partners. Fee structure and terms are disclosed in writing before any engagement begins.
Last reviewed: February, 2026
Note: Disclosure rules are evolving rapidly. This article reflects general trends and should not be relied upon as a guide to the specific requirements in any particular jurisdiction. Consult your attorney for current rules applicable to your case.