Testimony on “The U.S. Intellectual Property System and the Impact of Litigation Financed by Third-Party Investors and Foreign Entities” Before the House Judiciary Committee, Subcommittee on Courts, Intellectual Property, and the Internet

ABSTRACT:

This testimony was provided on Wednesday, June 12, 2024, before the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet. The testimony includes: (1) a brief introduction to the scope of third party litigation financing (“TPLF”) in today’s civil justice system; (2) a discussion of the most important concerns associated with this developing channel of investment, including a brief analysis of the overall lack of disclosure creating far too many known unknowns and unknown unknowns about the impact of TPLF, as well as a brief discussion of the risks of undue and dangerous disruption of our civil justice system through foreign influence; (3) an explanation of why the traditional arguments supporting a market for developing innovative investment vehicles do not obtain when investing in outcomes generated by courts for financial speculation or for other strategic purposes rather than to right wrongs; and (4) insights from the field of law and economics on why TPLF financiers have an incentive to not just invest in particular cases but also to fund rule-changing litigation that expands tort liability (i.e., increases the scope and number of available vehicles for payouts from TPLF investments) for private profit rather than for public good.