Third-Party Litigation Funding Bill Faces House Hurdle

The “Litigation Transparency Act of 2025,” which would curb the use of third-party litigation funding in U.S. lawsuits, failed to get to a vote in the House Judiciary Committee today. However, another bill, the “Protecting Our Courts from Foreign Manipulation Act,” introduced by Representative Ben Cline (R-VA), was reported out of the Committee on Tuesday by a vote of 15-11.

The Litigation Transparency Act was introduced by Representative Darrell Issa (R-CA) and would require any party in a civil action to disclose all third-party sources of funding. Representatives Scott Fitzgerald (R-WI) and Mike Collins (R-GA) are also sponsoring the bill.

According to a press release about the bill issued earlier this year, Issa said the legislation “targets serious and continuing abuses in our litigation system that distort our system of justice by obscuring public detection and exploiting loopholes in the law for financial gain… We fundamentally believe that if a third-party investor is financing a lawsuit in federal court, it should be disclosed rather than hidden from the world and left absent from the facts of a case.”

But the Inventors Defense Alliance this week sent a letter to House Judiciary Chairman Jim Jordan (R-OH) and Ranking Member Jamie Raskin (D-MD) urging them to oppose the bill and arguing that “[a]t its core, this bill would make patents and other intellectual property rights effectively unenforceable for the Davids of our economy: small inventors, startups, and entrepreneurs who challenge entrenched incumbents.”

Members of the Judiciary Committee echoed that sentiment on Tuesday in relation to the “Protecting Our Courts from Foreign Manipulation Act,” which would “amend chapter 111 of title 28, United States Code, to increase transparency and oversight of third-party funding by foreign persons, to prohibit third-party funding by foreign states and sovereign wealth funds.”

Rep. Raskin commented that both that bill and the Litigation Transparency Act “are obviously nothing more than giveaways to big corporations that don’t want to be held accountable when their actions violate the law and harm people.”

Raskin added that the practice of third-party litigation funding “is perfectly lawful, perfectly normal and consistent with the rules of professional conduct and ethics,” and that if anyone violates those rules the courts can deal with that.

Raskin and other Democratic representatives also rejected the idea that litigation financing has national security implications, with Raskin remarking that “I’m delighted my colleagues have an interest in what foreign governments are trying to do to influence us here in America but I guarantee it’s got nothing to do with foreign sources indirectly affecting parties whose causes of action must be adjudicated by American judges and juries, it has to do with direct payoffs to the President of the United States.”

In an additional hurdle for the Litigation Transparency Act, conservative groups like America First Legal and the Oversight Project are also opposing the bill.

During Tuesday’s hearing Representative Andy Biggs (R-AZ) accused his colleagues of conflating the “Protecting Our Courts from Foreign Manipulation Act” with the Litigation Transparency Act, arguing they “are very different things.” Biggs said the former bill would also apply to plaintiffs, noting the example in 2024 of a group of sanctioned Russian billionaires who created an investment fund to back bankruptcy lawsuits in New York, “allowing oligarchs to steer tens of millions of dollars into western financial institutions when they’ve been sanctioned,” said Biggs.

In another example, China-based technology firm PurpleVine financed several IP lawsuits against Samsung, which was only discovered because “a lone judge requires litigation financing disclosure in his courtroom,” Biggs added.

Chief Judge Colm Connolly of the U.S. District court for the District of Delaware has instituted several requirements in patent cases, including requiring heightened Rule 7.1 disclosures and disclosures of third-party litigation funding.

According to reports, Issa said his bill will be debated in a future hearing.

Image Source: Deposit PHotos
Image ID: 38432199
Author: alexskopje