When Goliath Steals from David: How Startups Can Use Litigation Finance as a Sling

A startup founder recently shared his story with me. He developed groundbreaking technology, secured a patent, and launched his business with high hopes. But now, a much larger competitor is using his patented invention without permission, raking in profits while he struggles to stay afloat. His business is running on credit cards, and the thought of spending millions to fight a legal battle seems impossible. “I can’t afford to take them on,” he told me.

This isn’t an isolated story—it’s a familiar struggle for small business owners. But it doesn’t have to end this way. Enter litigation finance: the ultimate equalizer.

When Goliath Steals from David

Large corporations often take advantage of small innovators, believing that startups lack the resources to defend themselves. In 2022, over 3,800 patent infringement lawsuits were filed in U.S. courts. By 2023, the number dipped to 3,111, but a significant portion still involved startups and small businesses going up against deep-pocketed industry giants.

Why do larger companies infringe? It’s not just about greed; it’s about strategy. Fighting a patent case in federal court can cost $2 million to $5 million—or more. For a startup barely breaking even, that’s insurmountable. Big companies know this, so they gamble that the small guy will walk away.

Here’s why it matters: when small businesses can’t afford to fight, it’s not just the entrepreneur who loses. Innovation suffers. Patents are meant to protect inventors and encourage investment in new ideas. If those protections erode, the incentive to innovate disappears. Startups are the lifeblood of technological advancement, and they deserve to play on a level field.

How Litigation Finance Levels the Field

Litigation finance flips the script. Funders step in and pay for the costs of the lawsuit, including attorney fees, expert witnesses, and court expenses. In exchange, they receive a share of the proceeds if the case is successful. If the case is lost, the entrepreneur owes nothing.

This arrangement allows startups to access high-quality legal representation without draining their limited resources. Importantly, litigation funders carefully vet cases, meaning they only invest in lawsuits with a strong likelihood of success. If a funder backs your case, it’s a signal that your patent is enforceable and your claims are valid.

Beyond financial relief, litigation finance provides strategic benefits. For one, it levels the power dynamic. Now, large corporations can’t rely on their financial advantage to wear down their opponent. Instead, they’re forced to confront the case on its merits. This shift often leads to quicker settlements and more favorable terms for small businesses.

Big Numbers, Bigger Impact

Let’s talk about the financial scale of patent litigation:

1. Damages Awarded: From 2021 to 2023, patent lawsuits in the U.S. generated over $6 billion in damages. This figure represents the cumulative damages awarded across 129 cases from 2021 to 2023, which makes the average award north of $46 million. While blockbuster awards like the $118 million Samsung was ordered to pay Netlist in 2024 grab headlines, even smaller settlements—$5 million, $10 million—can be life-changing for startups.
2. Litigation Costs: The average cost of taking a patent infringement case to trial ranges from $2.3 million for disputes with less than $10 million at stake to $7 million for high-value cases. While that number seems staggering, that represents around 15% of the average award from 2021 to 2023, which is far cheaper for a plaintiff than a 40% contingency fee. These costs include attorney fees, expert witnesses, and court filings, all of which are covered by litigation funders.
3. Funding Growth: Hedge funds and other litigation financiers are increasingly investing in patent disputes. In 2022 alone, nearly $1.5 billion was allocated to patent litigation funding. By 2024, the litigation finance market in the U.S. grew to over $15 billion, reflecting the increasing demand for alternative funding solutions.?
4. Settlements vs. Trials: Roughly 95% of patent disputes settle before trial. Having litigation finance in your corner significantly strengthens your bargaining position during settlement talks, often resulting in more favorable terms.

Case Study: Turning the Tables

Consider the example of a small biotech startup that held a patent for a life-saving medical device. A multinational corporation began selling a similar product, ignoring the startup’s patent claims.?

Without litigation finance, the startup would have been forced to drop the case or accept a lowball settlement.

Instead, a litigation funder stepped in, covering $3 million in legal fees. Armed with top-tier lawyers, the startup won a $25 million settlement, securing funds to expand its business and develop new technologies.

This is the power of litigation finance—it enables small businesses to enforce their rights and grow their ventures without crippling financial strain.

Why It Matters

Litigation finance isn’t just about money. It’s about fairness. Without it, innovation is at risk. Big corporations can’t be allowed to stifle competition by exploiting the high costs of litigation. By making the legal system accessible, litigation finance ensures that startups and small businesses have the resources to protect their ideas and push innovation forward.

Startups often feel powerless in the face of corporate giants, but with litigation finance, they can fight back. They can hold infringers accountable, safeguard their intellectual property, and send a clear message: innovation isn’t up for grabs.

The Bottom Line

Litigation finance is more than a financial tool—it’s a weapon for justice. If your startup has a strong case and a valuable patent, you don’t have to stand by and watch a larger competitor steal your ideas. You can fight. And with litigation finance, you can win.

Innovation deserves protection. Your ideas deserve protection. Don’t let the cost of justice stop you. With the right partners, you have the power to turn the tables and secure your future.

Want to Work With Me? Here Are 3 Ways I Can Help Your Startup Succeed

1. Schedule a Consultation: Not sure what your startup needs? Start with a complimentary 20-minute consultation to pinpoint your legal challenges and opportunities. Ready for a deeper dive? Book a 60-minute paid session to get tailored advice and actionable solutions for your pressing legal needs.

2. Flat-Fee Packages for Transactional Work: Need legal work without the hourly surprises? From incorporation to drafting agreements, I offer flat-fee packages so you know exactly what to expect. Clear, transparent, and tailored to your needs.

3. Fractional General Counsel Services: For startups looking for ongoing legal support, I offer monthly retainers for fractional General Counsel work. Get the legal expertise of an in-house attorney without the full-time cost.

Take the first step toward securing your startup’s future—schedule your consultation today!

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