After the longest government shutdown in modern history, the House is finally back in session. Unfortunately, one of its first orders of business appears to be siding with Big Tech over small inventors.
This week, the House Judiciary Committee will mark up the Litigation Transparency Act. The bill is being sold as a measure to promote honesty and transparency in the courts. In reality, it would make it far more difficult for small businesses to hold corporate giants accountable when their technology is deliberately stolen. That’s a direct threat to the innovation that keeps the U.S. economy dynamic.
Across industries, major firms have quietly built a business model around predatory patent theft. That’s by design. Big Tech has turned infringement into a calculated risk. The strategy even has a name: efficient infringement. Companies knowingly steal patented ideas, betting that the legal and financial barriers facing smaller competitors will prevent them from fighting back. If a case ever makes it to court, they can easily afford the payout -- which usually costs less than an upfront licensing deal would have.
Unfortunately, this model is quite lucrative. Most small businesses and individual entrepreneurs cannot afford the years and millions of dollars it takes to go up against mega corporations in court. Even with airtight evidence, small inventors often accept pennies on the dollar in settlements, knowing they lack the resources to fight the war of attrition.
In recent years, one thing has helped level the playing field: outside funding. Litigation financing -- where investors or funds help small inventors cover the enormous cost of suing deep-pocketed corporations -- allows innovators to enforce their rights in court. These financiers typically take a share of any award or settlement, much like lawyers working on contingency.
That support is often the difference between justice and surrender. It ensures that inventors have access to experienced legal teams and expert witnesses. And it reintroduces a measure of accountability into a system that has long favored the well-connected and well-capitalized.
But some in Congress want to severely restrict this financial lifeline for small businesses. They believe that third-party funding encourages frivolous lawsuits or even gives foreign actors a back door to U.S. trade secrets.
Their arguments simply don’t hold up under scrutiny. There’s no evidence that litigation financing is being weaponized by foreign adversaries. In fact, the Committee on Foreign Investment in the United States (CFIUS) already evaluates foreign investments to assess potential risks. On the contrary, litigation funding protects American inventors from nefarious actors by giving them a means to pursue patent infringement cases against large corporations based overseas.
As to the claim that litigation funding encourages frivolous lawsuits, the data tell a very different story. Patent litigation in U.S. courts has declined steadily for more than a decade, even as the number of patents granted each year has continued to rise. Investors have no incentive to back weak cases -- they make money only when plaintiffs win or secure legitimate settlements.
The Litigation Transparency Act would require plaintiffs to disclose the names of any outside funders. On its surface, that might sound harmless. But such disclosure could tip a plaintiff’s hand -- revealing how much financial support they have and inviting powerful defendants to tailor their strategy accordingly. It could also expose funders to public smears, making future partnerships harder to secure. In short, it would weaken the patent system for the very type of inventors it was designed to protect.
There’s nothing inherently sinister about third-party support in litigation. Americans accept that lawyers can take cases on contingency or that class-action lawsuits rely on pooled funding. Patent enforcement is no different. It’s about access to justice -- ensuring that the strength of your idea matters more than the size of your legal budget.
Congress should be helping small innovators, not stripping away the tools that make it possible for them to stand up to corporate giants. The Litigation Transparency Act aims to fix a problem that doesn’t exist. Instead, it risks making the real problem -- the systematic theft of innovation -- even worse.
When big companies can steal ideas without consequence, innovation stalls. America can’t afford to punish the very people whose ingenuity drives progress.
Kristen Jakobsen Osenga is the chief policy counselor at the Inventors Defense Alliance. She is the Associate Dean of Academic Affairs and the Julie & John Nowak Faculty Research Scholar and Professor of Law at the University of Richmond School of Law.
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This week, the House Judiciary Committee will mark up the Litigation Transparency Act. The bill is being sold as a measure to promote honesty and transparency in the courts. In reality, it would make it far more difficult for small businesses to hold corporate giants accountable when their technology is deliberately stolen. That’s a direct threat to the innovation that keeps the U.S. economy dynamic.
Across industries, major firms have quietly built a business model around predatory patent theft. That’s by design. Big Tech has turned infringement into a calculated risk. The strategy even has a name: efficient infringement. Companies knowingly steal patented ideas, betting that the legal and financial barriers facing smaller competitors will prevent them from fighting back. If a case ever makes it to court, they can easily afford the payout -- which usually costs less than an upfront licensing deal would have.
Unfortunately, this model is quite lucrative. Most small businesses and individual entrepreneurs cannot afford the years and millions of dollars it takes to go up against mega corporations in court. Even with airtight evidence, small inventors often accept pennies on the dollar in settlements, knowing they lack the resources to fight the war of attrition.
In recent years, one thing has helped level the playing field: outside funding. Litigation financing -- where investors or funds help small inventors cover the enormous cost of suing deep-pocketed corporations -- allows innovators to enforce their rights in court. These financiers typically take a share of any award or settlement, much like lawyers working on contingency.
That support is often the difference between justice and surrender. It ensures that inventors have access to experienced legal teams and expert witnesses. And it reintroduces a measure of accountability into a system that has long favored the well-connected and well-capitalized.
But some in Congress want to severely restrict this financial lifeline for small businesses. They believe that third-party funding encourages frivolous lawsuits or even gives foreign actors a back door to U.S. trade secrets.
Their arguments simply don’t hold up under scrutiny. There’s no evidence that litigation financing is being weaponized by foreign adversaries. In fact, the Committee on Foreign Investment in the United States (CFIUS) already evaluates foreign investments to assess potential risks. On the contrary, litigation funding protects American inventors from nefarious actors by giving them a means to pursue patent infringement cases against large corporations based overseas.
As to the claim that litigation funding encourages frivolous lawsuits, the data tell a very different story. Patent litigation in U.S. courts has declined steadily for more than a decade, even as the number of patents granted each year has continued to rise. Investors have no incentive to back weak cases -- they make money only when plaintiffs win or secure legitimate settlements.
The Litigation Transparency Act would require plaintiffs to disclose the names of any outside funders. On its surface, that might sound harmless. But such disclosure could tip a plaintiff’s hand -- revealing how much financial support they have and inviting powerful defendants to tailor their strategy accordingly. It could also expose funders to public smears, making future partnerships harder to secure. In short, it would weaken the patent system for the very type of inventors it was designed to protect.
There’s nothing inherently sinister about third-party support in litigation. Americans accept that lawyers can take cases on contingency or that class-action lawsuits rely on pooled funding. Patent enforcement is no different. It’s about access to justice -- ensuring that the strength of your idea matters more than the size of your legal budget.
Congress should be helping small innovators, not stripping away the tools that make it possible for them to stand up to corporate giants. The Litigation Transparency Act aims to fix a problem that doesn’t exist. Instead, it risks making the real problem -- the systematic theft of innovation -- even worse.
When big companies can steal ideas without consequence, innovation stalls. America can’t afford to punish the very people whose ingenuity drives progress.
Kristen Jakobsen Osenga is the chief policy counselor at the Inventors Defense Alliance. She is the Associate Dean of Academic Affairs and the Julie & John Nowak Faculty Research Scholar and Professor of Law at the University of Richmond School of Law.
