Patent Risk Digest
April 2018
Case Study: Transparency Through Benchmarking
As a first step towards insuring a company against patent infringement, RPX Insurance benchmarks a prospective insured’s litigation history and associated costs against those of its peers. Executives are often surprised to discover that their companies are spending more—at times, exponentially more—on defense and settlement costs as compared to other litigants. In applying for RPX Insurance coverage, a CFO of an established software company learned that his legal team’s “fight hard” patent defense strategy was not paying off; the company was overspending on legal fees, yet still paying millions in settlements. In this case, RPX’s benchmarking analysis helped to inform a company’s strategic decisions about patent litigation, including its purchase of an RPX Insurance policy, which will protect that company against future patent infringement suits at a fraction of its historical legal costs.
Patent Litigation: An Insurable (and Affordable) Business Risk
Thousands of companies, ranging from startups to Fortune 100 companies, have been sued for allegedly infringing patents that they didn’t even know existed. Since 2010, over 20,000 companies have found themselves unexpectedly facing enormous legal fees to defend against these types of cases, sometimes also paying outsized settlements to patent plaintiffs. These companies have learned the hard way that patent litigation has become a common business risk, on par with D&O liability and cyber risk. Patent litigation is hard to predict and can be devastating when it occurs. But like other common business risks, claims of patent infringement can be insured.
Read more »Insurers have tried to cover patent insurance in the past, but it has been a difficult risk to predict and to price; the nature of litigation means that legal costs and settlements usually remain secret. RPX has surmounted this particular obstacle through our work with the hundreds of companies in our defensive network. We have access to the actual costs of patent risk—something that no other insurer has. That data has allowed us to build an actuarial model that enables us to accurately assess the frequency and cost of the patent cases with which a company is likely to be threatened.
Particularly for companies that see only occasional patent assertion threats, a cost-effective approach to managing that risk is RPX Insurance. Premiums are affordable—as little as a few thousand dollars a year for most Series A companies. And RPX Insurance works. Companies that are insured through RPX often save as much as 60% on their overall litigation costs, and they spend half as much time in litigation as those that don’t have coverage.
RPX has saved its clients more than $3.5 billion to date in avoided legal and settlement costs through liability insurance, defensive patent acquisition, market intelligence, and strategic advisory services. To start protecting your company against patent risk, click here.
Password Management Campaign Steadily Grows
A wide array of companies offer online information and services, requiring customers or employees to enter a username and password for access. Such companies often engage a third-party vendor to manage user authentication, and recently those engagements have led to accusations of patent infringement. Indeed, the first half of March saw Cumberland Systems LLC file patent infringement suits against nine such companies—Cisco, Gucci, HP Enterprise, Honeywell, Lockheed Martin, Raytheon, Siemens, THG Energy Solutions, and VMWare—all over their use of password management systems provided by either Real-Time Innovations or ManageEngine. The single patent-in-suit generally relates to password encryption and has been asserted against nearly 25 companies to date, including users of other password management (i.e., Keeper Security, LastPass, and Sookasa).
Read more »Past campaign defendants include AT&T, Chipotle, Edmunds.com, Enova, iReverse Home Loans, JPMorgan, Marriott, True Media, Sony, Startups.com, Texas Freight Services, The Rocket Science Group, and Verizon. Most of Cumberland’s suits to date have been dismissed within just a couple months of filing, some following apparent settlements.
Contact Us
Contact patentriskdigest@rpxcorp.com to request more detailed information on patent litigation risk in your sector, as it applies to your particular business or clients. Click here for information on RPX Patent Litigation Insurance.