Patent Filings Fell 41% After One Judge Demanded Funder Names

Patent filings in Delaware's federal district court fell 41% over two years after Chief Judge Colm Connolly ordered parties in April 2022 to disclose any litigation funder — against a 15% national decline — and funded patent cases in his courtroom virtually disappeared. Delaware's Court of Chancery, the most important corporate court in the U.S., has adopted no equivalent rule.

The stakes are large. The global litigation finance market was estimated at $20.6 billion in 2025 and is forecast to more than double over the next decade; U.S. commercial funders alone managed roughly $16 billion in assets at the end of 2024. No federal statute or rule requires disclosure of even a funder's existence. Patent cases absorbed 32% of new funding commitments in 2024, up from 19% a year earlier, and roughly 30% of patent suits are now estimated to be funded. In 2025, non-practicing entities (firms that make no products but acquire patents to monetize them) filed 55% of all district-court patent cases and 90% in high tech.

What does the Chancery gap cost Delaware?

A Delaware company can land in Chancery today without knowing who pays for the suit against it, whether that backer controls settlement, or whether it's a competitor or a foreign state. Chancery proceeds case by case. In Burkhart v. Genworth, a 2024 putative class action, Vice Chancellor Nathan Cook ordered plaintiffs to produce their funding agreement in full, warning such cases are "especially ripe for a third-party funder to exercise improper control over the litigation." But that's one order from one of seven judges, won only after a motion to compel.

Chancery's opacity coincides with the corporate exodus from Delaware. Virtu Financial announced on Nov. 4 its relocation to Texas, following at least 30 exits over two years. Virtu itself faces pending litigation before Vice Chancellor Travis Laster, who denied its motion to dismiss — the same judge behind the widely criticized Cloudflare decision. Boards leaving most often cite an unpredictable Chancery Court; undisclosed funding feeds both that unpredictability and litigation costs. The Superior Court, for its part, amended its rules on Sept. 30, 2026 to permit discovery into a funder's existence, identity and control rights.

How real is the national-security risk?

Concrete, per the data. A December 2024 GAO report found stakeholders pointing to funders from China, Saudi Arabia and France, while conceding the full extent is unknowable. One firm has announced a "strategic capital relationship" with a sovereign wealth fund; another is majority-owned by a consortium led by Mubadala, Abu Dhabi's sovereign investor. A Shenzhen-based firm led by the general counsel of TCL was revealed to be financing patent suits against Samsung in U.S. courts — surfaced by Connolly's disclosure order — and Samsung later alleged the funder misused its confidential information.

Discovery magnifies the danger: it's estimated to account for 50% to 90% of litigation costs, allowing funded plaintiffs to run up bills or extract strategically sensitive documents under judicial cover.

Is the rest of the country waiting?

No. The House Oversight chairman urged the Judicial Conference in 2024 to consider mandatory disclosure; a bipartisan 2023 Senate bill would bar sovereign wealth funds from financing U.S. litigation; four senators introduced a transparency bill this February. The ITC proposed funder disclosure in Section 337 proceedings in April; Ohio enacted registration and foreign-funder prohibition in July; North Carolina on June 22 became the first state to ban third-party litigation investment outright. More than 20 states regulate the practice, and New Jersey's Assembly passed a disclosure bill in June.

The proposed fix: a Chancery rule modeled on Connolly's order, requiring parties to disclose whether a funder exists, who it is, and whether it controls strategy or settlement. Sunlight, as Justice Brandeis put it, is the best disinfectant.