Issa Convenes Hearing to Examine Impact of Third-Party Funding on Legal System, IP Litigation

Washington – This week, Congressman Darrell Issa (CA-48), Chairman of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, convened a hearing entitled “The U.S. Intellectual Property System and the Impact of Litigation Financed by Third-Party Investors and Foreign Entities.”

The hearing examined the impact of secretive, profit-motivated third-party litigation fueling frivolous patent lawsuits and exploiting our legal system, as well as the national security risk presented by funding from foreign adversaries. Additionally, Chairman Issa led discussion on the role Congress ought to play in reining in this troubling practice.

“Unlike traditional funding aimed at making victims whole, third-party litigation funding prioritizes investor profits over litigant need and often involves foreign interests from China and Russia. This practice, notably employed by ‘patent trolls’, undermines the integrity of our legal system and Congress should determine the necessary transparency and disclosure measures to curb these abuses,” said Rep. Issa.

The hearing featured the following witnesses:

• Hon. Bob Goodlatte, former Chairman, House Judiciary Committee
• Paul Taylor, Visiting Fellow, National Security Institute, George Mason University
• Donald Kochan, Professor of Law and Executive Director of the Law and Economics Center, Antonin Scalia Law School, George Mason University
• Professor Victoria Sahani, Associate Provost for Community and Inclusion and Professor of Law, Boston University

The following organizations submitted statements and letters of support in favor of transparency and disclosure in third-party litigation funding: 

• American Property Casualty Insurance Association
• Unified Patents
• Cisco Systems
• Center for Climate Integrity
• National Association of Mutual Insurance Companies
• U.S. Made
• National Association of Manufacturers
• Institute for Legal Reform

Chairman Issa’s opening remarks can be found here.

A recording of the hearing can be found here.