A payment dispute between William Ramey III, a frequent attorney for plaintiffs in patent lawsuits, and the litigation investment entity AiPi Inc. has become one more in a long line of examples where undisclosed litigation investment has gone wrong. In this case, it revealed that many third-party lawsuit funders appear to misrepresent their involvement in proceedings.
When Ramey withdrew from over 60 cases—across multiple states—for nonpayment, it became clear that they were all in fact connected to—and in Ramey’s words “controlled” by—the same monetization company, AiPi Inc. Importantly, the only reason why AiPi’s involvement became widely-known was because the attorney who replaced Ramey sought an extension, claiming that Ramey failed to fulfill his duty. Without this infighting, it is possible that AiPi’s role would have remained hidden to the courts, the defendants, and the public.
While AiPi described their role as a type of middleman, responsible for, “matching investors with patent owners,” Ramey’s declarations claim that AiPi did much more than just fund plaintiffs. Instead, they were allegedly a real player behind the scenes, responsible for drafting work products and shaping the legal strategy.
The litigation investment industry has come under increasing fire for the ethical concerns raised by investors not disclosing their involvement in cases. Bloomberg Law’s reporting on the Ramey conflict points out that AiPi’s actions resemble that of IP Edge, a patent monetization firm that recently had its behavior and that of its lawyers reported to the U.S. Justice Department and the relevant state bars for their apparent involvement in orchestrating lawsuits through a series of shell companies.
It shouldn’t have taken a funding dispute to reveal what was truly happening behind the scenes of our legal system. Dozens of cases were not only backed, but allegedly shaped and controlled, by a third-party monetization company. And because many courts do not have or enforce basic disclosureOne of the primary objectives of the patent system. In return for the government-granted right to exclude that is embodied in the patent, the inventor must disclose to the public through his patent the invention for which protection is sought. Inventors unwilling to disclose their invention to the public may instead opt for trade secret protection. practices, no one would have been the wiser.
The dispute between Ramey and AiPi draws attention to the fact that we don’t know how often, or to what extent, litigation investors are backing patent infringement cases. Simple transparency requirements would go a long way toward addressing legitimate ethical concerns and ensuring that policymakers understand the scope and impact of litigation investment entities.
