Patent Insurance

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Patent Insurance

The economics of patent litigation sometimes favor large companies or patent trolls rather than the party with the 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.

In A Hurry And Need A Quote?

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 the 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  damages).

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.


Patent Insurance – What it Covers

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 economics.

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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