As litigation funders look for an edge in analyzing the value of potential claims, Parabellum Capital LLC thinks it found one worth keeping away from its rivals.
New York-based Parabellum this week announced it had signed an exclusive license among litigation funders to use a software called PatentVector to help its team of underwriters more quickly scour companies’ patent portfolios—and determine if they are sitting on a treasure trove or just a bunch of bad patents.
Developed by former Fish & Richardson patent lawyer turned University of Kansas School of Law Professor Andrew Torrance, PatentVector analyzes patents based on their relationships to other inventions. The product received an award from The Stanford Center for Legal Informatics in 2015.
Sean Thompson, director of intellectual property strategies at Parabellum, said PatentVector is being used for first-time analysis of operating companies’ patent portfolios. The tool is a fast way to focus in on the important patents in any large portfolio, he said. Lawyers then perform a more traditional analysis on those patents before Parabellum decides to move forward, Thompson said. The fund has already successfully invested in a patent portfolio that was first analyzed by PatentVector, he said.
“We are always looking for an edge,” Thompson said. “These are investments that are difficult to underwrite, given their nature, so anything we can get that is helpful we will take a serious look at.”
In addition to negotiating an exclusive license among funders to use the product, Parabellum also brought on Torrance as Parabellum’s special adviser for data science. Torrance has published research on how patents can be deemed to be more or less “important” or valuable, based on their relationship to other important patents.
“Exclusivity as to funders is critical to us, because look at the copy-cat game we play,” Thompson said. “If people get a sense that what you’re doing is working, there will be much desire in our industry to replicate it. And we think [PatentVector] is going to add a lot of value for us and we want that edge for ourselves.”
Parabellum isn’t the only litigation funding firm using analytics to better value patents. Fulbrook Capital Management, LLC in early 2017 said it was working with Metonymy Labs to do just that.
“We’re one of the only teams, to my knowledge, that is actually trying to estimate outcomes using the content of the text in a way that allows us to sort of create underwriting models,” Kripa Rajshekhar, CEO of Metonymy Labs, said at an industry conference two years ago. “We’re trying to actually measure our ability to predict outcomes and therefore change the models that could be used for underwriting.”