Darrell Issa U.S. House of Representatives from California | Official U.S. House Headshot
Darrell Issa U.S. House of Representatives from California | Official U.S. House Headshot
Washington – Congressman Darrell Issa (CA-48), Chairman of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, introduced the Litigation Funding Transparency Act of 2024 today. The legislation aims to mandate disclosure of third-party litigation financing agreements in civil lawsuits.
Currently, civil litigation is often funded by undisclosed third parties such as hedge funds, commercial lenders, and sovereign wealth funds operating through shell companies. This practice poses particular challenges in Intellectual Property (IP) litigation due to the potential for large settlements and the involvement of patent-assertion entities (PAEs).
“This legislation is a breakthrough measure that will target serious abuses in our litigation system and achieve long-overdue transparency,” said Rep. Issa. “If a third-party investor is financing a lawsuit in federal court, it should be disclosed at the onset of the case. Awareness by all parties will help ensure fair and equal treatment by the justice system and deter bad actors from exploiting our courts.”
Third-party litigation financing has also raised national security concerns. Recent cases have revealed Chinese-backed funders fueling IP litigation against U.S. companies. These concerns have been echoed by 14 State Attorneys General, former Director of National Intelligence John Ratcliffe, Vice-Chairman of the Senate Intelligence Committee Senator Marco Rubio, and Ranking Member of the Subcommittee on Federal Courts Senator John Kennedy.
To address these threats and abuses, the bill would require disclosure at the onset of a civil action of investors who have a right to receive payment based on the outcome of a case.
The following organizations submitted statements of support:
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
Lawyers for Civil Justice
Congressman Issa also recently convened a subcommittee hearing examining the impact of third-party funding on the legal system and IP litigation.
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