The economics of patent litigation sometimes favor large companies or patent trolls rather than
the party with a stronger legal position. This is what existing patent insurance policies are designed
to prevent. These policies help to level the playing field, allowing small and medium sized companies
to assert their rights based on legal merit. Traditional Patent insurance thus can sometimes squarely
address some of the hazards generated by today's hostile patent ecosystem. And new forms of
patent insurance may be on the horizon that directly confront both patent trolls and some large
companies that are abusing their patent portfolios.
Alta is a Patent Insurance and Intellectual Property Insurance Expert. As our client, we will
explain the various ways to get coverage, guide you through the intensive underwriting process to get
proposals from multiple companies, and then help you to negotiate the best coverage provisions and
pricing. Alta also offers Intellectual Property Insurance, including Copyright Infringement
Insurance, Trademark Insurance, and Trade Secret Misappropriation Insurance.
E&O Insurance, Content and Media Liability Insurance, and Cyber Liability Insurance are also available.
Get A Price Indication Here. Or, read on and learn more.
Price of Patent Insurance
We have seen defensive patent insurance rates range between 1.5% and 5% of the limit for
a smaller company. So between $15,000 and $50,000 per million of coverage. Typically there is a
minimum retention (like a deductible) of 2% of the limit of insurance ($20,000 per million), and
coinsurance of at least 7.5% (the insurance company reimburses 92.5% of legal expenses and
Types of Patent Insurance
Defensive Patent Insurance - Funds defensive efforts against allegations of patent
infringement and pays damages.
Offensive Patent Insurance - Also called Abatement Insurance or Enforcement
Insurance, it funds enforcement actions against those who infringe against a firm's intellectual property.
1st Party Patent Insurance - Also called Multi-Peril Insurance, it pays for the reduction
in the value of a firm's intellectual property as a result of adverse legal rulings. A popular variant of this
coverage replaces lost revenue that results from an adverse preliminary injunction barring the sale of a
covered product while litigation is ongoing.
High-Hazard Patent Insurance - This is something new we are working on. This product will
insure against high-hazard situations involving abusive patent assertion techiques. If you have been declined
by an insurance company for patent insurance, or subject to particularly onorous exclusions or retentions
in relation to such an existing hazard, there is a chance we can help. The product can be configured to
combat specific patent assertions that are already underway. If litigation is afoot, specific IP assets are
being weaponized, or other elements of a campaign are in place, you may wish to have your counsel
contact us directly.
Non-Traditional Patent Insurance - Several other products are in development that will
handle risks not addressed in the present market. We can't discuss them at this point but stay tuned.
What is Covered With a Patent Insurance Policy
As we indicated, the economics of patent litigation often favor the wrong party. Patent insurance
policies help to level the playing field.
The policies accomplish this by funding meritorious litigation. When a claim is presented, the policy
requires some sort of determination that the policyholder is likely to prevail in the litigation. The
defensive policy thus protects the insured against patent trolls and competitors who bring weak
claims knowing that the insured does not have the funds to litigate. The policy also provides leverage
when a competitor or patent troll brings a weak case in order to attract a nuisance settlement. This
can be extremely valuable because a high proportion of today's patent assertions are based on
weak allegations, where the plaintiff is simply taking advantage of perverse patent litigation
The case is similar for the offensive policies. For example, sometimes a cash strapped inventor or a
small company may attempt to find partners to produce the patented invention. Sometimes these
potential partners decide to infringe the patent, believing the inventor will not have the resources
to litigate. Having an offensive policy can act as an effective deterrent.
The standard patent insurance products do not cover infringement situations that the client knew
about before a policy is issued. For this and other reasons, it is important to insure as early as possible.
Typically patent insurance covers specific products and/or specific IP. A brand new variant is
said to now be available which covers the entire firm rather than specific products or IP. However,
it is said to only be available in conjunction with a defensive patent aggregation scheme where the
firm effectively must purchase licenses to a broad range of patents.
As we stated we are also working on new forms of insurance. Some will handle instances where
traditional products think that specific hazards are too high. The others will address perils that
have never been addressed by the market.
Patent Insurance Application Process
Patent Insurance is one of the most heavily underwritten forms of insurance. And the number of entities
selling coverage is quite small.
The application process for Patent Insurance is unique and consists of two phases. In the first phase, an
abbreviated application is completed. Within about a week, the underwriters indicate whether they think the
risk is likely to be insurable, and what the price range is likely to be. They also provide a quote for the
underwriting fee associated with the second phase. In some instances, the underwriting fee must be paid
before commencing the second phase of underwriting. In other instances, the fee need only be paid if
a policy is purchased.
We proceed to the second phase you are still interested in procuring the coverage. In the second phase,
you complete a very detailed application. And as we indicated, you may need to pay an underwriting fee.
After several weeks, a firm decision on price and availability of coverage is made. This often involves quite
a bit of negotiation, and the exchange of further information. Many aspects of the coverage are negotiable,
but may require additional underwriting information or higher premiums.
Purchasing Patent Insurance
If you are interested in being helped by an expert, who will explain your options, help you with the
demanding underwriting process, get you multiple quotes to compare, and aid you in negotiating
the best pricing and coverage provisions, don't look any further. At Alta we are focused on this line
of business. Contact Us today.
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