Litigation Funding: A New Era in IP Disputes?

“Oftentimes, smaller businesses would like to take on bigger companies, and litigation funding has become a very active topic for them.” – Jean-Sebastien Dupont

While the litigation funding phenomenon may not yet have had the same impact in the intellectual property (IP) sector as it has in other practice areas, the advent of artificial intelligence (AI)—both as an analytical tool and as a significant factor in the IP world—may well be a game-changer.

“The last 12 to 18 months have seen several AI-related proposed class actions being filed throughout Canada, some of which may potentially require funding if they are authorised to proceed” says Jean-Sebastien Dupont, the Montréal-based head of IPH Group Limited member Smart & Biggar LLP’s litigation practice. “And I believe that’s something that will continue to evolve.”

So much so that the Intellectual Property Institute of Canada’s annual conference in October features, for the first time, a litigation funding-oriented session entitled Dispute Finance and IP Insurance: Turning Litigation into an Asset.

Bryce Barcelo, Director of IP Strategy at Certum Group, a large litigation funder, and a professor of patent litigation at the University of Houston Law Center, opined in a recent podcast that IP funding was “absolutely booming”, showing “strong momentum and seemingly no ceiling yet.”

Burford Capital LLC, another major litigation funder, is of similar mind: the company’s Burford Quarterly 2025 highlights AI-related IP as a top growth area in litigation funding.

And perhaps most telling, Soryn IP Capital Management, an IP financier founded in 2021 whose activities include litigation funding focused on IP matters, appears to be thriving. Among other services, Soryn’s services include funding for academic institutions in their patent enforcement suits, law firms pursuing contingency-based claims, and non-practising entities (NPEs).

As well, law firms in the US have traditionally funded many patent suits by way of contingency fee arrangements. Full-contingency law firms, however, have been withdrawing from the market, largely because of the higher risks associated with patent litigation as a consequence of the America Invents Act and recent jurisprudence from the Supreme Court and Federal Circuit.

As litigation funders go, however, AI-related IP disputes feature high-value matters that remain attractive to them. Funders can also now use AI tools to quickly assess the strength of cases by analysing patent portfolios, prior art, litigation history, and claim construction, speeding up the due diligence process whose snail’s pace is often criticised as a disincentive to litigation funding.  Additionally, AI allows funders to model litigation risk across IP assets, letting entities like startups and universities that have multiple patents but limited litigation budgets pick their spots and spread the risk of litigation without impinging on research liquidity.

“Several different funders have entered the Canadian market,” Dupont says. “I have pitched cases for one or two clients so far, and the firm has engaged in broader discussions with others.”

Common sense dictates that IP litigation funding will grow so long as the volume and value of IP litigation increase.

And increase it will, according to a report from DiMarket, a global market research and consulting firm. The report’s authors predict that IP litigation will increase in value from US$28.5 billion in 2025 to $50 billion by 2033, an annual compound growth rate of about 8.5 percent, embracing patent, copyright, trademark and trade secret litigation.

Propelling the growth, the report concludes, are accelerated innovation cycles, cross-border challenges, the increasing value of intangible assets, evolving regulatory landscapes, and the continuing rise of NPEs. Other catalysts include the proliferation of digital content and software, innovation in emerging technologies, and advancements in legal technology.

Patent litigation, according to DiMarket, is the IP category that is the “major driver” of litigation market growth, with AI and software litigation “burgeoning”— a significant conclusion given AI’s role in driving litigation funding. A surge in biotechnology and pharmaceutical sector patent litigation due to “ongoing research and development” is also on the horizon.

Finally, the report notes that small and mid-sized enterprises—where demand and opportunity for litigation funders is expanding incrementally—are “increasingly active” in IP litigation.

“Oftentimes, smaller businesses would like to take on bigger companies,” Dupont says. “And although we haven’t seen that many examples so far in Canada, litigation funding has become a very active topic for them.”