Key Questions to Ask Before You Accept Funding for Your Patent Infringement Litigation
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.
If you are a patent owner considering funding for patent infringement litigation, comparing term sheets is just one part of the evaluation process. Asking thoughtful questions can help you identify a litigation funding partner whose approach aligns with your goals and interests. Here are some questions to consider:
1. What is the funder’s expected return?
Funding structures vary. Some funders take a flat percentage of any recovery, others receive a multiple of their investment, and some use a combination or a tiered structure. Ask how the funder’s return changes depending on the timing and amount of recovery—for example, whether the return differs if the case settles early versus going through a full trial.
2. Who retains decision-making authority over settlements?
This is a critical question. Some funding agreements include provisions that give the funder input into, or even veto power over, settlement decisions. Others leave those decisions entirely with the patent owner. Understanding where that authority lies is essential before entering into any agreement. Note that some jurisdictions have rules or pending legislation that may restrict or require disclosure of funder influence over settlement decisions. Your attorney can advise you on the rules applicable to your case.
3. How involved will the funder be in litigation strategy?
The level of funder involvement varies significantly. Some funders take a hands-off approach, while others may want input on key decisions such as attorney selection, expert witnesses, or overall litigation strategy. Clarifying expectations on both sides early in the relationship can help avoid conflicts later. Regardless of the funding arrangement, your attorney’s professional obligations and independent judgment should remain with you as the client, consistent with applicable rules of professional conduct
4. What happens if the case is unsuccessful?
Most third-party patent litigation funding is structured as non-recourse, meaning the patent owner generally owes nothing if the case does not result in a recovery. However, the specific terms of each agreement govern, and there may be exceptions or conditions. It is important to confirm the non-recourse nature of the arrangement in writing and to understand any scenarios in which repayment could still be required.
5. Are there disclosure requirements in your jurisdiction?
An increasing number of federal courts require parties to disclose the existence and terms of third-party funding arrangements. The scope and specifics of these requirements vary by jurisdiction and are evolving. Understanding the disclosure landscape for your case is important, and your attorney can advise you on what may be required.
6. Does the funder have experience with patent litigation?
Patent infringement cases involve technical complexity, specialized legal procedures, and unique valuation considerations that differ from other types of litigation. Working with a funder that has a track record in patent cases—and staff with patent law experience—may provide additional value beyond just the financial investment.
7. What are the funder’s reporting requirements?
Ask what information the funder will require on an ongoing basis. Some funders require detailed quarterly reports on litigation progress, while others take a lighter-touch approach. Understanding these obligations upfront—and discussing with your attorney how to comply without compromising privileged communications—is an important part of the evaluation.
Asking these questions can help ensure you are not just securing funding, but partnering with a funder whose approach is well-suited to your patent enforcement goals.
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