Hedge funds and institutional investors are financing the latest wave of IP lawsuits.
DeepNines is a tiny Dallas software maker that protects corporate computer networks from hackers and other threats. But in August it became an attacker, filing a lawsuit against McAfee . The suit alleges that the security-software giant infringed on a DeepNines patent, one that combines an intrusion detection and prevention system with a firewall, in a single device. McAfee denies the charge, saying the patent relies on previously known technology, and is gearing up for a long and costly fight.
But DeepNines has found a way to fund its burgeoning legal bills. In January it sold an $8 million zero coupon note to Altitude Capital Partners, a New York City private equity firm, promising in return a cut of any winnings stemming from the lawsuit. The payout is based on a formula that grants Altitude a percentage ...
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