Patent holders are increasingly concerned about having to pay their adversaries’ legal fees. The litigation funder Gerchen Keller Capital thinks it has a solution.
Gerchen Keller launched a new affiliate on Friday called Athena FSP (FSP stands for “fee-shifting product”). Athena makes a simple offer to patent holders: If a judge grants your opponent’s attorney fees, we’ll cover $3 million of the award. In exchange, Athena will take a cut of the winnings if the plaintiff secures settlements or verdicts.
Athena’s leader is Ashley Keller, a former U.S. Supreme Court clerk and an ex-partner at Bartlit Beck Herman Pelancher & Scott. Keller remains a managing director at Chicago-based Gerchen Keller, which made headlines earlier this year for raising $260 million for a new fund.
Keller told us he doesn’t know of any competing service. He also said Athena has been in the works ever since the U.S. Supreme Court agreed to hear Octane Fitness v. Icon Health and Fitness last year. In its April 29 decision in that case, the high court gave trial judges much more leeway to impose fees and costs on losing parties. Many tech companies have applauded the Octane decision, arguing that the threat of fee-shifting will deter so-called patent trolls—those much-maligned entities that assert patents but don’t sell products.
“We saw the landscape shifting and planned for this change,” Keller said.
There’s no shortage of investors willing to back patent cases in exchange for a slice of the winnings. Typically, however, these funders cover their clients’ legal fees but refuse to pay the opponents’ bills if fees and costs get shifted.
That’s where Athena comes in. Keller said that a patent plaintiff could hypothetically go to one funder for most of its financing needs, and then sign up for Athena as a sort of supplemental insurance against fee-shifting. He said Athena plans to take a significant share of the client’s early winnings until a certain threshold is met—typically a number in the low to mid six figures—and will then retain a small residual interest in the case.
While Keller has zero objection to working with nonpracticing entities, they aren’t the only ones he’s recruiting. He said that operating companies with the resources to pay an attorney fee award could still benefit from Athena’s services.
“I think you are going to see a wide spectrum of businesses working with us,” he said.