Seedling Life Science Ventures (“Seedlings”) is the plaintiff in a patent infringement action against Pfizer relating to Patent No. 2,486,935 and auto injectors. Seedlings brought a motion seeking approval of a litigation funding agreement (LFA) with a third party (Bentham IMF Capital Limited, the Canadian subsidiary of IMF Bentham Ltd, a professional litigation funding enterprise from Australia), as required by the terms of the agreement: Seedling Life Science Ventures LLC v Pfizer Canada Inc, 2017 FC 826.

The LFA, to which Seedlings’ counsel are also parties, provides that Bentham will fund Seedlings’ legal fees and disbursements, and that each of Seedlings, Bentham and counsel for Seedlings will be entitled to financial returns from a successful outcome. Seedlings remains in control of the litigation but Bentham has the right to be consulted on settlement. Bentham will have access to all documents in the litigation, but will be subject to the same confidentiality or implied undertaking obligations as Seedlings.

The Prothonotary dismissed the motion on the basis that such approval is not required beyond class proceedings. Moreover, the Federal Court does not have jurisdiction to make any determination as to the validity of the LFA. Seedlings is asserting its own rights in the within action, thus the question of whether the LFA constitutes champerty or maintenance does not affect the validity of Seedlings’ rights, and therefore champerty or maintenance is not a basis to bring the issue within the Court’s jurisdiction.

The Prothonotary also found it was not necessary to determine this issue for the purpose of allowing information to be shared with the financing entity over the course of the litigation, or to give effect to its agreement to be bound by confidentiality and the implied undertaking. No confidentiality order was yet in place, and in any event, previous examples have addressed disclosure to third parties. The implied undertaking will allow such sharing of information when it is for the purpose of conducting the litigation, and can be enforced by the Court without any determination on this motion.

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