Insights
Publications

Insurance Coverage Against Patent Infringement Suits by Non-Practicing Entities

11/26/2012 Articles

Looking for a possible new strategy to protect yourself against patent infringement lawsuits filed by non-practicing entities (NPEs)? There is an innovative new potential option to evaluate as part of your strategy to manage the threat and expense of NPE litigation.

In response to the continued rising tide of patent infringement lawsuits filed by NPEs, RPX Corporation and Aon Risk Solutions have recently announced that they will begin offering small and medium-size companies up to $2.5 million in insurance coverage against NPE lawsuits. The insurance is currently available only to U.S. based companies with $1 billion or less in annual revenue. Although RPX has long offered defensive patent licensing strategies to help companies combat NPEs, this is the first time that it has offered insurance aimed at protecting defendants from NPEs.

Numerous academics and legal market observers have noted the sharp rise in NPE lawsuits in recent years. For example, a 2012 study from Boston University School of Law found that NPE lawsuits are “growing rapidly” and that such suits imposed an estimated $29 billion in legal costs in 2011 alone.[1] The study further found that much of the burden of NPE lawsuits falls on small and medium-size companies: 82% of defendants in NPE cases are companies that generate less than $100 million in annual revenue.[2]

Not only are NPEs targeting companies of many different sizes, they are also expanding beyond traditional high-technology companies. For example, a 2012 study by PatentFreedom shows that although NPEs have historically targeted well-known technology companies more than others, NPEs are gradually shifting focus away from those top companies and broadening the range of targets they pursue.[3]

NPE lawsuits can pose a significant threat and create great uncertainty for smaller companies. A 2011 PricewaterhouseCoopers study of patent litigation shows that median damages awards in patent litigation have varied between $2 and $10 million in the past six years.

It is difficult to assess the value of this new insurance product in light of the lack of publicly available information about the terms of coverage and cost. Further information can be obtained by contacting RPX.


[1]           James Bessen and Michael J. Meurer, The Direct Costs from NPE Disputes 2 (Boston University School of Law, Working Paper No. 12-34), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2091210.

[2]           Id.

[3]           See PatentFreedom, Exposure by Industry, available at https://www.patentfreedom.com/about-npes/industry/.

Firm Highlights

Publication

How To Avoid Allegations of Trade Secret Misappropriation in California

When departing a company, an executive, founder, or employee with access to trade secrets or confidential information may face legal allegations around whether they will use or disclose their former employer’s trade secrets at...

Read More
Publication

How Companies Can Stop Trade Secret Disclosure in California

When an executive, founder, or employee with access to trade secrets or confidential information leaves a company to work elsewhere, employer trade secrets might be used by a competitor. Under two laws, California’s Uniform...

Read More
Publication

Failures Are Valuable IP: Protect Your Startup’s Negative Trade Secrets

Technology companies and start-ups are familiar with protecting inventions with patents, and protecting their secret formulas, source code, and algorithms as trade secrets. But tech companies may not be aware of another powerful form of...

Read More
Publication

What Recent Rulings in 'hiQ v. LinkedIn' and Other Cases Say About the Legality of Data Scraping

LinkedIn obtained a permanent injunction on Dec. 6 in its six-year-old lawsuit against data scraping company hiQ Labs, which LinkedIn quickly cheered as a “final, decisive victory” that established an “important legal precedent.” While...

Read More
Publication

Highlights from 2022 Unified Patents Corporate IP Strategy Conference

Recently, several Farella lawyers attended the 2022 Corporate IP Strategy Conference, co-hosted by the Santa Clara University High Tech Law Journal and Unified Patents. Eugene Mar, Erik Olson, Dan Callaway, and Tom Pardini enjoyed...

Read More
News

Farella Names Carolina de Armas and Hilary Krase As Leadership Council on Legal Diversity Pathfinders

Carolina de Armas and Hilary Krase
Read More
News

PNC Scores a Win in Battle With USAA Over Mobile Check Deposit Patents

Eugene Mar, intellectual property litigation partner and chair of the Technology Industry Group, spoke to American Banker for the article "PNC Scores a Win in Battle With USAA Over Mobile Check Deposit Patents." "My...

Read More
News

Jim Day Named Among Daily Journal’s Top IP Lawyers in California

James Day Headshot
Read More
Publication

Under FTC’s New Proposed Rule, Employers Will No Longer Be Able to Rely on Noncompete Agreements

The Federal Trade Commission (FTC) has proposed a rule that would prohibit the use of noncompete agreements in employment contracts. Noncompete agreements prevent employees and independent contractors from pursuing certain forms of employment &ndash...

Read More
News

Farella Braun + Martel Announces 2023 New Partner Class

Read More