Fortress Announces Integration of Litigation Finance Firm into Its Legal Assets Business
Following its late 2019 acquisition of Vannin Capital, Fortress Investment Group LLC has announced that the operations of the UK-based litigation funder—including a number of its employees—are “now being restructured into the Fortress Legal Assets business”. According to Fortress, this change will have no impact on the existing investments of Vannin Capital, which at the time of its acquisition reported having $500M in available investment capital and assets under management “consistently in the billions”.
Before the 2019 acquisition, Fortress had been a backer of Vannin since at least mid-2016, when the parties entered into a “significant” senior secured debt facility that reportedly took Vannin’s capital to £373m ($500M).
In a September 2019 press release, Vannin reported that Fortress (which per Vannin was one of “several” potential buyers that extended an offer) had acquired 100 percent of the equity in Vannin from existing shareholders, including majority owner Bramden Investments—the private investment vehicle of DLA Group, the Isle of Man-based family office of Dan Craddock. Craddock cofounded Vannin Capital in 2010 with Matthew Cox, a former corporate solicitor who currently reports serving as the firm’s CIO. While Cox appears to have stayed on, Vannin’s CEO and CFO left the firm after completion of the Fortress acquisition, which was also closely followed by shuttering of Vannin’s US and Germany offices.
Fortress’s integration of Vannin Capital takes place amid a busy period for the litigation finance industry, which saw multiple established players complete large fundraises late in Q3. Also during the third quarter, several NPEs began new campaigns financed by third parties, including a litigation finance firm as well as a hedge fund. For details, see “Litigation Finance Injected with Additional Capital in Q3, as More NPEs Launch Campaigns with Third-Party Funding” (October 2021).
Formed in 2007, New York-based Fortress Investment Group is a global investment manager reporting $53.9B in assets under management as of June 30, 2021. The firm raised $900M in 2018 for its first “formal” IP fund and is reportedly raising a second IP fund expected to “easily match” its 2018 raise. At the close of 2017, Japanese conglomerate SoftBank completed an acquisition of Fortress for $3.3B; according to the company, Fortress now operates within SoftBank as an independent business.
Fortress has acquired a stockpile of patents over the years, subsets of which it has litigated through various controlled plaintiffs, collectively filing hundreds of patent infringement cases during the last three years alone. Many of those suits followed Fortress’s 2018 acquisition of the assets and monetization business of Australian NPE Uniloc Corporation Pty. Limited, which prompted a long fight in the courts over the effects and public disclosure of the many complicated agreements governing the longstanding relationship between Fortress and Uniloc; RPX coverage of those issues can be found here.
In July 2020, Fortress acquired publicly traded NPE Finjan Holdings, Inc. in an all-cash deal valued at $43.9M. The press release announcing the transaction stated that Finjan “will maintain its brand and business model post-transaction”, continuing to license and enforce the anti-malware portfolio that the NPE has been asserting in litigation since 2006. That acquisition has also not been without hiccups. Intel has argued, both in the Delaware Court of Chancery and in a federal district court case filed against it by Fortress subsidiary VLSI Technology LLC that, with Fortress’s acquisition of Finjan, Intel (an existing Finjan licensee) became licensed to the intellectual property of every Fortress “affiliate”. To dig into that fray, see “As Finjan Sees Setbacks, Delaware District Court Rules That Another Fortress NPE Must Face License Defense” (August 2021).
Last month, Judge Edward M. Chen of the Northern District of California granted in part a motion to dismiss and to strike a second amended complaint filed by Intel and Apple, ending, for now, antitrust litigation against a group of plaintiffs associated with Fortress. Apple (which exited the case in June of this year) and Intel had argued that the defendants violated antitrust and unfair competition laws by aggregating and asserting a “massive but obscured” patent portfolio in order to charge supracompetitive royalty rates. RPX coverage is available here.