In 2025, Congress has once again reintroduced the Litigation Transparency Act, a bill that, despite its innocuous name, threatens to undermine the ability of small inventors and entrepreneurs to enforce their patent rights. See my post on last year’s bill. While proponents argue that the bill promotes transparency in litigation, its practical effect would be to impose additional burdens on inventors, making it significantly more difficult for them to defend their intellectual property against large corporations that engage in what is commonly referred to as “efficient infringement.”
This legislation is not a neutral measure aimed at improving judicial efficiency. Rather, it represents a fundamental shift in favor of well-funded corporate defendants, many of whom already exploit the high costs of litigation to deter inventors from pursuing legitimate claims. If enacted, the bill would weaken the intellectual property system that has long been a pillar of American innovation, effectively stripping small businesses and individual inventors of their ability to protect their contributions. Congress should reject this legislation and instead focus on strengthening, rather than eroding, the mechanisms that allow inventors to secure and enforce their patent rights.
The Role of Patent Enforcement in American Innovation
The U.S. patent system has been instrumental in fostering technological advancement and economic growth. It provides inventors with the exclusive rights to their creations, allowing them to attract investment, scale their businesses, and compete in a market that might otherwise be dominated by larger entities with vast resources. However, these protections mean little if inventors lack a viable means of enforcing their rights in the face of infringement.
In recent years, the challenge of enforcing patents has only grown. Large corporations, both domestic and foreign, have increasingly adopted a strategy of efficient infringement, calculating that the costs of defending a lawsuit are lower than the price of licensing a patent. When inventors attempt to hold these companies accountable, they often find themselves outmatched, as litigation costs routinely reach millions of dollars. This financial burden can be insurmountable for startups and small businesses, effectively preventing them from protecting their intellectual property.
To level the playing field, some inventors have turned to litigation funding, a practice that allows them to secure financial backing from third parties in order to pursue legitimate claims. These funding arrangements ensure that inventors can bring cases to court based on merit rather than financial capability, thereby deterring infringement and reinforcing the integrity of the patent system.
How the Litigation Transparency Act Undermines Patent Rights
The Litigation Transparency Act purports to address concerns about undisclosed litigation financing. In reality, it creates unnecessary and counterproductive hurdles for small inventors seeking to enforce their patents. The bill mandates extensive disclosures regarding litigation funding, including the identities of investors and the details of financial arrangements supporting a case.
This requirement presents several problems:
1. Exposure of Legal Strategy: Litigation funding agreements often contain sensitive details about the strategy and approach an inventor will take in pursuing their claims. Requiring disclosure of these arrangements would provide corporate defendants with an unfair tactical advantage, allowing them to anticipate and counteract inventors’ legal arguments before a case even begins.
2. Deterrence of Investment in Patent Enforcement: Investors who provide litigation financing could become targets of harassment, intimidation, or pressure campaigns designed to dissuade them from supporting inventors. This would have a chilling effect on funding availability, making it even more difficult for small businesses to secure the resources they need to enforce their rights.
3. Disruption of Judicial Efficiency: Courts already possess the necessary tools to manage potential conflicts of interest and ensure fair proceedings. Case law demonstrates that judges are fully capable of balancing transparency with the need to protect privileged and commercially sensitive information. Imposing a blanket disclosure requirement across all cases would introduce additional, unnecessary procedural complications, further delaying and complicating litigation.
4. Favoring Corporate Infringers: By making it harder for small inventors to secure funding and pursue enforcement, the bill effectively grants a greater advantage to large corporations that routinely engage in infringement. Without meaningful enforcement mechanisms, patent rights lose their value, and innovation is discouraged.
Existing Legal Frameworks Already Address Transparency Concerns
Proponents of the Litigation Transparency Act argue that additional disclosure requirements are necessary to prevent unethical or abusive litigation practices. However, courts already have mechanisms in place to handle these concerns.
For example, in Taction Tech., Inc. v. Apple Inc., a federal court in California found a balanced approach to litigation funding transparency, allowing disclosure of certain details while protecting confidential legal strategy. Similarly, in Trustees of Purdue Univ. v. STMicroelectronics N.V., a Texas court determined that funding-related documents were irrelevant to the merits of the case and therefore did not need to be disclosed. These cases demonstrate that existing judicial oversight is sufficient to ensure fairness while preserving the integrity of litigation funding arrangements.
Rather than imposing broad and restrictive disclosure requirements, Congress should recognize that courts are fully capable of managing these issues on a case-by-case basis. Judicial discretion, rather than sweeping legislative mandates, is the appropriate mechanism for handling concerns about litigation funding.
The Broader Implications for U.S. Innovation and Economic Competitiveness
Beyond its immediate impact on patent litigation, the Litigation Transparency Act raises broader concerns about the United States’ commitment to fostering innovation and maintaining a competitive technological edge. Startups and small businesses account for a significant share of breakthrough inventions, with firms employing fewer than ten people producing 60% more patents per capita than large corporations with over 25,000 employees. By undermining their ability to protect their intellectual property, this bill would stifle investment in new ideas and technologies.
Furthermore, weakening patent enforcement does not only harm American innovators, but it also benefits foreign competitors, some of whom engage in systematic intellectual property theft. By making it harder for U.S. inventors to enforce their rights, the bill inadvertently strengthens foreign entities that do not face similar legal barriers in their own jurisdictions. This is particularly concerning at a time when technological leadership is increasingly viewed as a matter of national security.
Conclusion: Congress Should Reject This Harmful Legislation
The Litigation Transparency Act represents a misguided attempt to address concerns about litigation funding at the expense of inventors’ rights. Rather than promoting fairness, it introduces new obstacles for those seeking to enforce their patents, ultimately benefiting large corporations and foreign actors that engage in infringement.
Congress should reject this bill and instead focus on legislative solutions that strengthen, rather than weaken, the U.S. patent system. Ensuring that inventors have a viable means of enforcing their rights is essential to maintaining American leadership in innovation, fostering economic growth, and preserving the principles of fairness and justice in intellectual property law.
If policymakers are truly committed to transparency and fairness, they should prioritize measures that protect small businesses and entrepreneurs, and not legislation that tilts the balance further in favor of corporate infringers.
Comments