WASHINGTON (June 12, 2025) Senator Thom Tillis (R-NC) recently introduced the “Tackling Predatory Litigation Funding Act,” a bill that would impose significant new taxes on litigation funding investments. Representative Kevin Hern (R-OK) has introduced a companion bill in the House.
The Inventors Defense Alliance — representing small inventors and startups across the U.S. — strongly opposes both bills. Kristen Osenga, Chief Policy Counselor at the IDA, issued the following statement:
“The Inventors Defense Alliance opposes the Tackling Predatory Litigation Funding Act.
“Large companies — particularly Big Tech firms — frequently steal smaller rivals’ technology and then use their deep pockets and armies of lawyers to drag out patent infringement suits until the smaller innovators run out of resources. Only recently have smaller innovators evened the playing field — by partnering with third-party litigation financiers who front the cost of the lawsuits in exchange for a share of any winnings.
“This proposal would deprive startups of this legal aid by imposing a punitive 40.8% levy on litigation financing partnerships’ profits at the entity level regardless of whether that income is already subject to U.S. corporate or ordinary income tax rates. It would even impose this punitive tax on tax-exempt U.S. non-profits and public pension funds. Although the measure claims to target foreign investors, its application is indiscriminate — impacting domestic nonprofits, pension funds, and innovators alike.
“This massive tax hike will chill innovation, harm institutional investors, and make it harder for American businesses to protect their intellectual property rights
If lawmakers want to discourage frivolous lawsuits, they ought to reform the tort system directly — not deprive inventors of the funding needed to defend their intellectual property from deep-pocketed corporate infringers.”
About the Inventor’s Defense Alliance: The Inventors Defense Alliance is a nonpartisan, nonprofit, 501(c)(4) advocacy organization that works to build support for inventors’ rights, safeguard justice, and protect access to capital. Learn more at www.InventorsDefense.org.