Claim construction

The judicial process of interpreting the meaning and scope of patent claim language, which governs what the patent does and does not cover and therefore which products or processes infringe. Claim construction is a question of law decided by the court — not the jury — and is typically the single most important legal ruling in a patent case because it determines both infringement and validity. Funders treat claim construction risk as a binary event: an unfavorable construction can collapse an infringement theory entirely, and a favorable one can force early settlement. Pre-investment technical and legal due diligence almost always includes an independent claim construction analysis to assess whether the funder's investment thesis is vulnerable to a defendant's alternative interpretations.

Because claim construction is decided by the judge alone and effectively pre-determines both infringement and validity, funders commission an independent construction analysis before every material capital release, testing the plaintiff's preferred reading against the most defendant-favorable reasonable interpretation. A funding agreement's staged-draw schedule is frequently built around the Markman timeline specifically because this ruling is the single event most likely to collapse or validate the entire investment thesis at once, rather than outcome risk working itself down gradually through discovery.