IPO Owners As Plaintiffs
How to Get an Insurer to Pursue Patent Infringers with Attorneys You Choose at Its Expense – The Advent of Patent Pursuit Policies
As the cost of patent infringement litigation escalates, the average case will require more than $1,000,000 to pursue through trial according to a 1999 AIPLA (American Intellectual Property Law Association) survey. Many patent holders have been successful in procuring damages, principally via reasonable royalty awards, that make such lawsuits financially worthwhile. Lawsuits that do settle between major corporations are typically resolved through cross-licensing of patents possessed by each corporation. The net effect of these cases is to generate new marketing alliances.
For companies that do not have a significant patent portfolio that they can exchange with a competitor to resolve infringement disputes, the inability to afford costly patent litigation may mean the abandonment of a key market advantage, central to the company’s strategy. For such companies, the ability to afford patent infringement is a matter of economic survival.
Some years ago, creative patent attorneys appreciated the insurance industry seeking solutions to this issue. Persuaded that an advance of monies to fund such lawsuits could often be paid back from the proceeds realized through successful litigation, some select insurers began underwriting a new form of insurance – pursuit coverage that placed insurers and companies with patent rights into partnership in their efforts to realize the full benefit of the patents the companies had procured.
Known as “pursuit,” “abatement” or “enforcement” coverage, the purpose of this policy is to reimburse a policyholder for legal expenses it incurs in its pursuit of an infringer. This is really not a true form of insurance, but rather a risk-transfer mechanism with certain insurance-like aspects in the trigger of coverage.
Industries Likely to Benefit from Pursuit Coverage
Infringement Insurance: Offensive Exposed Industries:
– Legal Costs to Prosecute an Infringer – Manufacturing
– Covers Scheduled Patents Only – Consumer Products [Toys,
– Prior Approval Required to Commence Apparel, Personal Care, etc.]
Litigation – Computers – Hardware &
– Insurer Shares in the Recovery Software
– Limits over $1M – Electronics
– Premium under $100,000 – Furniture
– Medical
– Food
Coverages Available for Pursuit of Patent Infringement Lawsuits
As yet, few of these policies have been interpreted. Nevertheless, a number of intellectual property counsel have procured reimbursement of the fees that they reasonably incurred in patent litigation. Typical issues will revolve around whether: (1) a viable infringement claim exists; and (2) facts not disclosed at time of application bar the right to pursue a claim (i.e., on sale bar applies because products within patent claims were advertised one year or more prior to application for the patent). The patents issued to Markman and Hilton Davis were both covered by pursuit insurance. A number of major insurers are considering extending similar coverage. The ensuing decade may well see such policies change the complexion of patent infringement litigation.
As the cost of patent infringement litigation escalates, the average case will require more than $1,000,000 to pursue through trial according to a 1999 AIPLA (American Intellectual Property Law Association) survey. Many patent holders have been successful in procuring damages, principally via reasonable royalty awards, that make such lawsuits financially worthwhile. Lawsuits that do settle between major corporations are typically resolved through cross-licensing of patents possessed by each corporation. The net effect of these cases is to generate new marketing alliances.
For companies that do not have a significant patent portfolio that they can exchange with a competitor to resolve infringement disputes, the inability to afford costly patent litigation may mean the abandonment of a key market advantage, central to the company’s strategy. For such companies, the ability to afford patent infringement is a matter of economic survival.
Some years ago, creative patent attorneys appreciated the insurance industry seeking solutions to this issue. Persuaded that an advance of monies to fund such lawsuits could often be paid back from the proceeds realized through successful litigation, some select insurers began underwriting a new form of insurance – pursuit coverage that placed insurers and companies with patent rights into partnership in their efforts to realize the full benefit of the patents the companies had procured.
Known as “pursuit,” “abatement” or “enforcement” coverage, the purpose of this policy is to reimburse a policyholder for legal expenses it incurs in its pursuit of an infringer. This is really not a true form of insurance, but rather a risk-transfer mechanism with certain insurance-like aspects in the trigger of coverage.
Industries Likely to Benefit from Pursuit Coverage
Infringement Insurance: Offensive Exposed Industries:
– Legal Costs to Prosecute an Infringer – Manufacturing
– Covers Scheduled Patents Only – Consumer Products [Toys,
– Prior Approval Required to Commence Apparel, Personal Care, etc.]
Litigation – Computers – Hardware &
– Insurer Shares in the Recovery Software
– Limits over $1M – Electronics
– Premium under $100,000 – Furniture
– Medical
– Food
Coverages Available for Pursuit of Patent Infringement Lawsuits
As yet, few of these policies have been interpreted. Nevertheless, a number of intellectual property counsel have procured reimbursement of the fees that they reasonably incurred in patent litigation. Typical issues will revolve around whether: (1) a viable infringement claim exists; and (2) facts not disclosed at time of application bar the right to pursue a claim (i.e., on sale bar applies because products within patent claims were advertised one year or more prior to application for the patent). The patents issued to Markman and Hilton Davis were both covered by pursuit insurance. A number of major insurers are considering extending similar coverage. The ensuing decade may well see such policies change the complexion of patent infringement litigation.
