A response to Coke Morgan Stewart, Bad Patents, Patent Trolls, and the PR Campaign Created to Excuse Infringement, IPWatchdog (Oct. 12, 2026).

The Fourth Narrative

Coke Morgan Stewart is right, and I want to add to it. The three narratives she identifies, the bad patent, the PTAB cancellation offered as proof of one, and the patent troll, are the first three moves in a sequence of four. The fourth is being made right now, in the Judicial Conference's rules process and in statehouses around the country, and it reaches what the first three cannot. It goes after the money.

The fourth move follows straight from the first three. If the patent is bad and the owner is a troll, then the capital that gets the owner into court must be the engine of the abuse. Call it third-party litigation funding. Require that it be disclosed in every case as a matter of course. Enforcement of a presumptively valid property right then becomes something a plaintiff has to explain before he is allowed to proceed. Nobody has to argue the patent is invalid or that the accused product does not infringe. It is enough to make financing the case expensive and dangerous.

I have been writing about this for two years, and I have commented to the Committee on Rules of Practice and Procedure twice this year. What follows is the money side of Stewart's argument. Same reversal, aimed at the capital that makes enforcement possible in the first place.

Where I Have Said This Before

I have litigated Stewart's second and third narratives, not just written about them. In NPEs Have No Obligation to Mark Under the Statute—and that Should Extend to an NPE's Settlement Licensees, IPWatchdog (Oct. 17, 2024), I made the point that § 287(a) penalizes a failure to mark patented articles and so cannot bind a patentee who has no article to mark. The Supreme Court said as much ninety years ago in Wine Railway Appliance Co. v. Enterprise Railway Equipment Co., 297 U.S. 387 (1936). I returned to it in Settlement Licenses and Patent Marking: Intent of the Parties is Key, IPWatchdog (Feb. 23, 2025), and again after VDPP, LLC v. Volkswagen Group of America, Inc., No. 2024-2226 (Fed. Cir. Aug. 19, 2026), in Wine Railway at Ninety (Sept. 17, 2026).

Marking is the third narrative wearing a statute. Take the pre-suit damages away from an owner who licenses instead of manufacturing and you have arrived where the word troll was trying to take you, with a citation to show for it.

The cost argument runs alongside it. Patent litigation has priced most patent owners out of their own property right. I said so in The Hidden Price of Patent Wars (June 16, 2025) and Steps to Lower the Cost of IP Litigation (Sept. 30, 2025), and in Built to Outlast You (June 26, 2026) I set out what an owner is actually up against when a large company decides not to pay. My objection to the vocabulary is the one Stewart makes, and I put it in “Nuisance Value” Is a Slur, Not a Standard (June 1, 2026). My objection to doctrine pressed into service as policy is in Section 101 Was Never an Anti-Troll Law (Aug. 13, 2026).

On funding I have commented to the Rules Committee twice this year, first in The Rule Suggestion for Disclosure of Third-Party Litigation Funding Will Harm Patent Plaintiffs (Mar. 16, 2026), and then in a comment letter of September 28, 2026 opposing Rules Suggestions 26-CV-8, 26-CV-30, and 26-CV-31. The rest of this piece comes out of that letter.

False Narrative #4: Mandatory Funding Disclosure Is About Transparency

Here is what is pending. Lawyers for Civil Justice and the U.S. Chamber's Institute for Legal Reform asked the Advisory Committee on Civil Rules, in Rules Suggestion 26-CV-8 (Mar. 10, 2026), to amend Rule 26(a)(1)(A) so that a funded litigant turns its funding agreements over to the other side in the initial disclosures. No motion. No showing of relevance. No showing of need. They filed again on September 8 in Rules Suggestion 26-CV-30, and on September 14 214 companies asked the Committee to adopt the text as written, pointing at patent cases as the reason.

The proposed Committee Note gives the game away. It says the required materials are not discovery and therefore are not subject to the relevance and proportionality standards of Rule 26(b)(1). Read that twice. It does not clarify existing practice. It carves a categorical exception out of the central limit on discovery in the federal system, and it carves it for a class of commercially sensitive documents that often carry counsel's own assessment of where the case is weak.

The Advisory Committee has already seen the problem. Its May 2026 report calls the analogy between funding disclosure and insurance disclosure “not airtight,” acknowledges that disclosing all funding details can create serious opinion work product problems, and says serious questions remain about what courts would do with the information. Some version of a funding disclosure proposal has sat on the Committee's agenda for more than a decade and none has been adopted. The one now on the table answers the drafting problems by dispensing with Rule 26(b)(1) for this category of document. That is not an answer to those problems. It is a way around them.

Watch which word is carrying the load. Transparency does the work here that bad patent and troll do in Stewart's account. Nobody has to show that the funding agreement bears on a claim or defense in the case in front of the court. The word does it, and what the word delivers is the plaintiff's budget.

The One-Way Mirror

The proposal reaches a nonparty that funds a claim and holds a financial interest in the action. It carves out contingency fees, insurance, and ordinary loans. Put the two columns side by side and it stops looking like a transparency measure.

No rule requires a patent defendant to disclose its internal litigation budget, its expected defense costs, its settlement reserve, or whether it will pay for an appeal. When Bayer needed litigation money in 2025 it went to Wall Street for a cash call, and nothing on the table would touch that. The Chamber of Commerce has filed plaintiff-side suits in federal court since 2020, paid for by contributors it does not name.

The proponents' best argument is the 1970 insurance amendment, and I accept its premise. The Committee required disclosure of liability policies because an insurer who controls the defense and pays the judgment is the real adversary, and because both sides ought to be able to make the same realistic appraisal of the case. Followed to its end, that reasoning hurts the proposal twice over. If influence over the litigation is what triggers disclosure, the rule has to reach the defense-side instruments through which influence gets exercised, and the proposal exempts every one of them. The two documents are also not the same thing. A liability policy is written before the accident. It tells a plaintiff what money exists to pay a judgment and says nothing about how the insurer values this particular claim. A funding agreement is written after the complaint, and it contains the plaintiff's budget, the date the money runs out, and counsel's assessment of the case. GAO drew that distinction in its December 2024 report. The 1970 rule gave both sides the same kind of knowledge. This proposal hands one side the other's appraisal and lets it keep its own.

The signature page tells the rest of it. By my count of the fourteen pages of the September 14 letter, 160 of the 214 signers are legal officers, 33 of them with litigation-specific titles, and another twelve are claims officers or risk managers. Roughly sixty-five of the organizations are insurers, reinsurers, or mutuals. Amazon, Google, Meta, Microsoft, Cisco, Intel, IBM, Qualcomm, Samsung, Lenovo, Comcast, AT&T, and Verizon signed. Those are vertically integrated producers. They design, build, and sell the products in which other people's patents get practiced. Two universities signed. As far as I can tell, no inventor did.

The signatories are candid about what they are after. Quoting their own 2024 predecessor letter, they say they cannot make informed decisions without knowing who controls the litigation, and that settlement unravels when a plaintiff has to obtain a funder's approval. That is a description of bargaining leverage. It is the same leverage a defendant gets from learning the plaintiff has no funder at all. GAO collected stakeholder views on the point in its 2024 report: knowing how much money a plaintiff has may push a defendant to settle quickly, and it may also hand the defendant an unfair advantage.

The Courts Already Have the Tools, and They Use Them

None of this makes funding immune from discovery, and I do not argue that it should be. Where an arrangement bears on standing, ownership, the real party in interest, settlement authority, or judicial disqualification, the existing Rules let a court get what it needs to decide the question. The patent cases show it. They also show something the proponents would rather not dwell on. Judges are already drawing these lines.

In Fleet Connect Solutions LLC v. Waste Connections US, Inc., No. 2:21-cv-00365-JRG, 2022 WL 2805132 (E.D. Tex. June 29, 2022), the Eastern District of Texas refused to compel funding agreements where the defendant had not shown their relevance to any claim or defense, and it treated the asserted need to test ownership as no basis for a fishing expedition. In Hardin v. Samsung Electronics Co., No. 2:21-cv-00290-JRG, 2022 WL 14976096 (E.D. Tex. Oct. 25, 2022), the same court reviewed materials given to prospective funders in camera, found they carried counsel's analysis of the patents and the legal issues, and held them protected work product. Odyssey Wireless, Inc. v. Samsung Electronics Co., 2016 WL 7665898 (S.D. Cal. Sept. 20, 2016), shows valuation-related funding information reaching discovery on a different record. Preservation Technologies LLC v. MindGeek USA, Inc., 2020 WL 10965161 (C.D. Cal. Dec. 18, 2020), shows work product protection doing its own separate work even where funding bears on valuation. And in In re Nimitz Technologies LLC, No. 2023-103 (Fed. Cir. Dec. 8, 2022) (nonprecedential order), the Federal Circuit let a district court's funding inquiry stand where that court had identified concrete concerns, and it stressed that the ordered records did not have to be made public and that privilege and work product objections could still be raised.

That is the system working. By ILFA's count, which LCJ and ILR cite themselves, federal courts deny roughly sixty percent of funding disclosure motions. A nationwide party-facing rule overrides that judgment in every case, including the sixty percent in which a judge looked at the request and said no.

There is a deeper mismatch. The FTC's 2016 study of twenty-two patent assertion entities found two business models. Portfolio entities held large portfolios, licensed broadly, often without suing first, and produced roughly eighty percent of reported licensing revenue. Litigation entities asserted fewer than ten patents at a time, settled for sums typically under $300,000, filed ninety-six percent of the suits, and engaged in conduct the Commission described as consistent with nuisance litigation. Commercial funders made 287 new investments in 2024, against a federal civil docket of roughly 348,000 filings. A litigation entity settling cases for under $300,000 does not need a funder and could not attract one. Funded patent cases sit on the other side of the FTC's line. They are high-stakes assertions against large implementers, brought by owners who cannot carry a seven-figure case alone.

So the proposal misses the conduct it invokes and lands on the conduct it does not. Twenty years ago Professor Golden traced the worst of that behavior to litigation cost asymmetry rather than to the strength of the patents, and he pointed the cure toward procedure, meaning fee-shifting, pleading standards, and venue. Those tools exist. Section 285 turns on the substantive strength of a party's position and how it litigated, not on what the defense cost. Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014). None of them screens for merit by asking who is paying. The Committee should ask why the one procedural change these 214 companies want is the one that does.

Blame the Owner, Excuse the Infringement, Price the Owner Out

The Committee asked in April 2025 whether funding prompts unsupported claims. The evidence says it does not. Funders are non-recourse investors who lose everything when a case fails, and the economic work finds that the marginal cases funding makes possible are no weaker than the unfunded average. Samuel Antill & Steven R. Grenadier, Financing the Litigation Arms Race, 149 J. Fin. Econ. 218 (2023). On that record, the cases a disclosure rule would price out of the funding market are the meritorious ones.

They are also concentrated where the signatories live. More than sixty percent of the orders granting funding disclosure have come in patent cases. Four of the seven technology companies GAO interviewed put the share of funded patent suits they face at somewhere between half and three-quarters. These are the companies asking for the rule, and these are the cases it would reach.

None of this requires the Committee to do nothing. If it wants national guidance, a Rule 16 case management provision would let a court consider limited disclosure where disqualification, standing, or a nonparty's authority over settlement is actually in play, with Rules 26(b)(1), 26(b)(3), and 26(c) left where they are. If the Committee concludes that a uniform disclosure requirement is unavoidable, then make it symmetric and court-directed. Key the trigger to a contingent economic interest or a contractual right to control the action. Reach an insurer's or indemnitor's control rights the same way it reaches a funder's. Lodge the agreement with the court instead of serving it on the adversary, and let a party reach it on a particularized showing. That is uniformity without the one-way mirror. Before any of it, let the Federal Judicial Center finish its study of the District of New Jersey's local rule, which is the only thing in this debate likely to produce a fact.

Stewart's reversal has a fourth act, and it is the cheapest of the four. The first three require an argument about the patent or about the owner. This one requires a budget. Hand a repeat defendant the date its opponent's money runs out and it never has to prove the patent is bad or the owner is a troll. It only has to wait.

That is what the exercise is for, and it ought to be called what it is. This is not a transparency rule. It is a way to make a presumptively valid property right too expensive to enforce. The accusation becomes the defense, the financing becomes the accusation, and the infringement never does come up.

Ramey LLP is a Texas-based intellectual property law firm dedicated to representing small patent owners, startups, and independent inventors in disputes against larger corporations.