July 26, 2013 – Lex Machina, Inc. announced today that it closed a $2 million funding round led by X/Seed Capital.  Lex Machina provides unique and trusted intellectual property (IP) litigation data and predictive analytics to leading companies, law firms, consultants and public interest users.

Companies and law firms are struggling to cope with the recent explosion in patent litigation.  Lex Machina brings big data to the legal realm and helps companies anticipate, manage, and win patent and other IP law suits. It achieves this via its state-of-the-art natural language processing technology, which was developed at Stanford University and includes Lexpressions™. This funding will allow Lex Machina to expand its products and team to meet growing market needs.

The funding will also allow Lex Machina to expand in another important area.  Companies are increasingly interested in understanding their current patent assets.  Lex Machina has begun to leverage its data to help companies evaluate their patent portfolios. It is currently completing two such engagements with two of the ten largest technology companies in Silicon Valley.

“Lex Machina provides previously impossible insights into the IP landscape,” said Robert Siegel, X/Seed Capital General Partner.  “They intimately know all the parties involved in patent litigation and licensing and help their customers draw valuable conclusions that inform winning IP business and legal strategies.”  X/Seed Capital is an early stage venture fund with over $100 million under management that backs driven leaders pursuing breakthrough innovation by providing capital, resources, time and attention.  Siegel and X/Seed Entrepreneur in Residence Jeff Thermond have joined Lex Machina’s board.

“We are very excited to have the support of X/Seed and Costanoa Venture Capital as well as IP industry leaders who are personally investing,” said Lex Machina CEO Josh Becker.  “This funding will enable us to improve our existing SaaS product and develop more IP analytics products that will employ our proprietary data to predict litigation outcomes, inform transaction and investment decisions and value and monetize critical IP assets.”

Besides X/Seed Capital, other participants in this round include:

  • Costanoa Venture Capital, recently founded by Greg Sands
  • Naval Ravikant, Founder of Angel List
  • Jeff Hammerbacher, Founder and Chief Scientist, Cloudera
  • Eric Goldman, Professor, Santa Clara University School of Law and Director, High Tech Law Institute
  • Jean Kovacs, President, Northern California, Harvard Business School Alumni Angels
  • David Chao, Co-Founder and General Partner, DCM

Lex Machina’s prior investors include:

  • Ulu Ventures
  • Dan Cooperman, Of Counsel, Bingham McCutchen and former Apple and Oracle General Counsel
  • Joe Lonsdale, Co-Founder, Palantir Technologies
  • Jerry Yang, Co-Founder, Yahoo!

Lex Machina’s core IP litigation data includes 130,000+ District Court patent, copyright, trademark and antitrust cases, filed from 2000-today.  These cases include 6,000,000+ docket entries and access to 4,000,000+ documents.

Lex Machina uses this core data to generate detailed meta-data that is unavailable from any other provider.  Data sets include detailed information on 1,400+ judges, including 28,000+ outcomes for their terminated patent cases; 340,000+ parties, including 54,000+ patent case affiliate clusters; 100,000+ attorneys and 30,000+ law firms; 36,000+ U.S. patents asserted or cited in litigation; and 850+ International Trade Commission §337 investigations and all 160,000+ related documents.

Every day, Lex Machina’s crawler extracts data and documents from PACER, all 94 District Court sites, ITC’s EDIS site and the PTO site.  The crawler automatically captures every docket event and downloads key District Court case documents and every ITC document.  It converts the documents by optical character recognition (OCR) to searchable text and stores each one as a PDF file.  When the crawler encounters an asserted or cited patent, it fetches information about that patent from the PTO site.

Next, the crawler invokes Lex Machina’s state-of-the-art natural language processing (NLP) technology, which includes Lexpressions™, a proprietary legal text classification engine.  The NLP technology classifies cases and dockets and resolves entity names.  Attorney review of docket and case classification, patents and outcomes ensures high-quality data.  The structured text indexer then orders all the data and stores it for search.

Lex Machina’s web-based application enables users to run search queries that deliver easy access to the relevant docket entries and documents.  It also generates lists that can be downloaded as PDF files or spreadsheet-ready CSV files. Finally, the system generates a daily patent litigation update email, which provides links to all new patent cases and filings.

In 2009, Lex Machina spun out of a Stanford University Law School and Computer Science Department project called the IP Litigation Clearinghouse (IPLC).  Founded by Law Professor Mark Lemley in 2006, the IPLC mapped every electronically available patent litigation event and outcome.

Lex Machina continues to fulfill the original mission of the IPLC — to bring openness and transparency to IP law.

“IP considerations have catapulted from a small corner of the legal department to the C-level suite and boardroom of most major companies today.  Lex Machina provides essential intelligence for the transactions and disputes that comprise IP business strategy.”
– Dan Cooperman Of Counsel, Bingham McCutchen Former General Counsel, Apple and Oracle

“From initial investigations through trials and appeals, Lex Machina’s rich data and easy-to-use search functions fundamentally improve an IP litigator’s chances of winning.”
– Sasha Rao Partner, Ropes & Gray

“Lex Machina’s big data enables the empirical view of the patent system that is crucial for sound policymaking.  Its elegant interface makes it possible to find what you are looking for efficiently and precisely.”
– Colleen Chien Professor of Law, Santa Clara University School of Law

“Lex Machina provides a uniquely powerful tool for my practice, both as a litigator and mediator.  For example, its patent case outcomes data reveal a judge’s entire case decision history.  This data is invaluable for choosing venue, drafting motions, preparing oral arguments and advising on settlement, as well as for mediating cases.”
– Vicki Veenker Of Counsel, Sherman & Sterling

“Lex Machina’s data helps a company license and defend a critical asset class — its legally protectable ideas.”
– John Danforth Former General Counsel, Rambus

“In pharma IP litigation sudden events often occur. Using Lex Machina enables us to assemble well-supported responses in a fast-paced legal environment.”
– Huong Nguyen Senior Director of Intellectual Property, Impax Labs