Letter to the editor: Third-party litigation funding is a national security threat

OPINION:

Some foreign governments have found a new weapon to use against American companies: the American courtroom.

Through third-party litigation funding (TPLF), adversaries can secretly bankroll lawsuits, drain resources and access sensitive business data.

Financiers push for higher settlements, drag out proceedings and make decisions based on their own profit motives instead of justice.

Most alarming is TPLF’s national security threat. When outside funders target U.S. companies and sensitive sectors, such as national defense, through litigation, they can also gain access to sensitive business data during the litigation process, including pricing, customer lists and proprietary designs.

And through TPLF, an adversary can pursue these goals with almost no risk of exposure — even to the judge.

A recent op-ed in the Washington Times, “Congress about to make patent theft easier” by Kristen Osenga (Web, July 22) claims that there is “little evidence” of adversaries exploiting U.S. patent litigation. But the facts tell a different story.

An investment firm established by sanctioned Russian billionaires with ties to Vladimir Putin has funded lawsuits in the U.S. and U.K. to evade international sanctions.

In 2023, PurpleVine IP, a Chinese third-party litigation investment firm, financed multiple intellectual property lawsuits in U.S. courts against a technology company and its subsidiary. And we have already seen at least one foreign-owned asset manager deliberately select a judicial venue for lack of disclosure requirements.

A recently released U.S. Navy report examined patent litigation driven by three adversary-aligned jurisdictions and found that entities affiliated with those jurisdictions surfaced in roughly 10% of all U.S. patent disputes.

The report also highlights how TPLF enables and obscures this foreign involvement. A bipartisan House committee reached similar conclusions.

Ms. Osenga’s op-ed frames disclosure as a threat to inventors, but that is backward. American innovators are most at risk when foreign funders operate without transparency.

Several TPLF bills are before Congress and more than 20 states now have TPLF laws on the books.

Adversaries should not be able to weaponize America’s legal system against itself, and transparency in litigation funding is not an attack on inventors or access to justice.

The U.S. Chamber’s Institute for Legal Reform will continue to work to ensure that our courts serve Americans, not foreign entities operating in the shadows.

STEPHEN WAGUESPACK

President, Institute for Legal Reform

U.S. Chamber of Commerce

Washington