Inter partes review (IPR)

A post-grant administrative proceeding before the Patent Trial and Appeal Board (PTAB) in which a petitioner challenges the validity of an issued patent on grounds of anticipation or obviousness based on prior art. IPR is one of the most consequential risks in IP litigation finance because a successful IPR petition can invalidate the very claims being asserted in district court, eliminating the funded claim's value entirely. Funders routinely commission IPR vulnerability assessments before committing capital, and funding agreements often include provisions governing how IPR proceedings are managed and whether the funder can direct or veto IPR-related strategic decisions. Since institution rates and claim cancellation rates at PTAB have historically exceeded 70% for instituted petitions, IPR exposure is a primary driver of case-level risk pricing.

IPR exposure is priced as a binary pre-litigation gate: funders commission an independent invalidity assessment against the same prior art a defendant would raise at the PTAB before releasing capital, because a successful petition can zero out the asset entirely regardless of infringement strength. Deals are frequently structured with a delayed or tranche-based draw that holds back the bulk of the commitment until the one-year IPR filing window narrows or a petition is denied institution, converting an open-ended validity risk into a defined, time-boxed underwriting checkpoint.