ILR Presses ITC to Toughen Litigation Funding Disclosure Rules

The Institute for Legal Reform (ILR) has urged the U.S. International Trade Commission to adopt — and strengthen — proposed rules that would force parties to disclose third-party litigation funding in Section 337 investigations.

In formal comments submitted to the ITC, the ILR argued that transparency is the only reliable way to identify conflicts of interest, reveal who is influencing litigation and settlement decisions, improve settlement negotiations, and protect the integrity of adjudicative proceedings. Section 337 investigations cover allegations of unfair import practices, including intellectual property infringement, and can result in exclusion orders blocking products from the U.S. market.

The filing takes direct aim at the litigation finance industry's culture of secrecy. It contends that the rapid growth of litigation funding, often conducted behind closed doors, allows funders to exert significant control over cases while remaining hidden from courts, opposing parties, and the public.

That combination — money plus anonymity — sits at the center of the ILR's case. A funder bankrolling a complaint at the ITC can shape strategy, veto settlements, or dictate litigation decisions without any party or administrative law judge knowing the funder exists, according to the comments.

The ILR does not stop at endorsing the ITC's draft rule. It asks the commission to go further in three specific ways.

First, expand the proposal to require disclosure of related litigation funding arrangements, so funders cannot shield their involvement by routing money through linked deals.

Second, narrow exemptions for certain loans. The ILR warns that broad carve-outs could otherwise be used to conceal third-party litigation funding activity behind ordinary financing.

Third, mandate production of the underlying funding agreements. The comments argue the ITC cannot assess a funder's actual rights and influence over a case without seeing the documents that define them.

The filing also raises a national security dimension. It highlights concerns that undisclosed or foreign-backed litigation funding may pose national and economic security risks by giving foreign actors access to sensitive information or opportunities to influence U.S. businesses and critical industries through litigation.

The concern is not hypothetical in the ILR's framing: litigation at the ITC routinely involves proprietary technology, trade secrets, and competitive information about critical U.S. industries. A hidden foreign funder with control rights over a Section 337 case would gain leverage over exactly the kind of information U.S. policy seeks to protect.

The ILR concludes that robust disclosure requirements are essential to protect both the public interest and confidence in the ITC's proceedings.

The stakes for the litigation finance industry are considerable. Mandatory disclosure of funding agreements would expose the economics and control terms of an industry that has built its model, in significant part, on confidentiality. Funders, defendants, and complainants before the ITC will now be watching whether the commission adopts the proposed rule as drafted, or moves to the tougher standard the ILR requests.