Is patent enforcement insurance all it's cracked up to be?
There are a few companies out there that seem to offer insurance packages for small(er) players in a market that want to be able to defend patents that are likely to be infringed.
On the face of it, this makes good sense (given reasonable premiums and terms), but there seem to be very few providers of this kind of insurance product, and very few stories online that tell of successes/failures which would give a prospective buyer more insight.
Has anyone here had experience dealing with some of the providers in this market? Has anyone used this before, and if so was it money well spent?
1 Answer
I didn't work directly on it so can't quote prices and experience but I would suggest to ask yourself some more questions on what it is that your defending against.
A startup that I was an employee that was a JV from some larger firms where working in space where there was a lot of patent possible fighting as the companies tried to position themselves for the 3d movie technologies in theatres. For them it made sense because of the financial backing, the protection the investors required and to get rating from the rating agencies.
So I suggest asking yourself what is the market competition like, what kind of backing do I have and what am I willing to throw at it. I believe cash is king so in general I wouldn’t go down this road at start-up phase.
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As a startup entering an industry with a few very large incumbents, my concern is that they may be willing to infringe on my IP and draw my company into a legal battle that will drain our cash reserves. We are trying to weigh the costs of insurance vs. the risk of going broke trying to enforce a patent against a much larger company that has the money and time to try and wear us down. – Michael 14 years ago
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So the IP does it create a feature/benefit set that the market will go crazy for and do you have proof of that? Or does it just put you in the market with an alternative solution? I would suggest to hold on getting insurance until after there is evidence that customers will buy the product and you get a feel for demand on it. Now sometimes you can't reach the market as well and the idea still has benefit and only the big guys will be able to implement and you will want to sell the IP. In that case it may make sense prior to persuing the sale to get insurance so you have a viable stick. – John Bogrand 14 years ago
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Good point. For us, the benefits are proven and the market definitely wants our product with the patent protected features. We're in a position to bring it to market ourselves, and are busy doing so. You seem to suggest holding off insurance until sales and demand are more proven. Our concern is that usually you can't get insurance of this type if someone is already infringing. What questions/criteria did you use to decide on your timing? – Michael 14 years ago
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Out of my area of experetise now. I'd suggest going to a patent attorney that has experience with working with insurance underwriters. Perhaps going to market makes it to late I don't know and you maybe right. – John Bogrand 14 years ago
