New "Patent Troll Insurance" Costly, May Invite Lawsuits

Submitted by patentadmin on Tue, 04/23/2013 - 13:46

You can buy insurance for many different types of business liabilities, so why not insurance to protect your company from lawsuits brought by so-called "patent trolls" or non-practicing entities (NPEs)? That kind of coverage is now available for members of a group that represents digital agencies and production companies. At first glance the insurance may look like a fine idea, but some attorneys say the coverage has its drawbacks.

First, the facts: The Society of Digital Agencies, or SoDA for short, has partnered with intellectual property insurance provider IPISC to offer intellectual property insurance that covers "IP infringement lawsuits brought against a member agency’s services, products, and/or processes, as they relate to website, mobile site, and mobile app development." That narrow range of coverage reflects the fact that many NPEs assert patents related to common Internet features and functions.

But Law360 (subscription required) points out that the patent troll policy has been "slow to catch on" for two reasons: The cost of patent litigation may be quick to exceed coverage limits, and attorneys say that "buying the insurance may actually invite patent suits." Uh-oh!

So it looks like there's still no quick fix or blanket protection for protecting your business or organization from patent lawsuits. However, it will be interesting to see if this patent lawsuit insurance takes off, and if other industry groups begin offering similar coverage.

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