Do my clients really have patent litigation risk?

Yes. Any company that makes, sells, or even just uses technology is at risk of being sued for patent infringement. Patent risk is far more pervasive than most observers—even GCs and corporate risk managers—realize. Every year, thousands of companies are accused of patent infringement, either directly or through shared liability with their customers, with resolutions costing potentially in the millions.

Patent troll risk is more prevalent. Since 2010, more than 11,000 companies have been sued by patent trolls who acquire patents only to accuse other companies of infringement and generate payments. Annually, they sue some 2,500 companies, and roughly half are being sued for the first time. Most of these are smaller companies, with revenues of less than $100 million, and are least prepared to handle this risk on their own.

Why should my clients be interested in patent coverage?

Patent risk is unpredictable and expensive, and it is an insurable business risk like any other.

With the cost to resolve a single patent infringement suit ranging from tens of thousands to millions of unbudgeted dollars, patent insurance provides your clients with predictability—an affordable and expected annual premium and retention.

RPX is the only insurance provider that quantifies the likelihood and severity of your clients’ risk based on real actuarial data and patent expertise—closing their gap in coverage.

Why should my clients buy RPX Insurance versus the competitive patent insurance offerings?

The primary reason to choose RPX is that our insurance offering is more than risk transfer. RPX offers policyholders a variety of tools and resources to proactively manage their risk, and what’s more, as the largest and most successful provider of patent risk solutions, RPX is the only insurance provider that can help insureds avoid claims.

Insurance from RPX saves your clients time and money so that they can focus on running their businesses without the distraction of litigation. Companies insured through RPX can reduce their total time in litigation by half and total litigation costs per case by ~60%.

My client’s lawyers do a great job for them. Why do they need RPX insurance?

While your client’s lawyers do a great job for them in the courtroom, RPX’s insurance solutions offer your clients cost-savings during a lawsuit, and even more importantly before they are even sued. An insurance policy from RPX helps them manage their legal expenses and reduces their exposure to unpredictable patent litigation.

RPX can typically reduce litigation resolution costs by ~60% on every claim. We also provide our policyholders with proprietary data, on-call patent expertise, and access to high-quality legal defense counsel at pre-negotiated low rates. As a result, our policyholders typically have legal expenses that are 80% lower than they would have otherwise been.

We’ve designed our patent insurance solutions to provide additional risk mitigation that can reduce the likelihood of being sued and/or reduce the time and expense involved in resolving cases. For example, we can often pre-emptively acquire patents before a client is sued: a unique service that no other entity, including outside counsel, can provide.

What is Alice?

Alice v. CLS Bancorp is a 2014 Supreme Court decision that lowered the threshold that district courts use to determine if patents are valid, and in some ways made it easier to invalidate low-quality software patents. Alice provides a way to eliminate some broad patents, which is a good thing for the patent system overall, but it remains to be seen how widely Alice can be applied. So far, Alice challenges have impacted only a small percentage (about 4%) of all patent infringement campaigns, and have tended to target some of the least expensive campaigns.

What is an inter partes review (or IPR)?

IPRs, a result of the America Invents Act (AIA) passed in 2011, are a formal petition to challenge a patent’s validity before the US Patent and Trademark Office. Typically, the IPR process is shorter and less costly than district court litigation (though per petition expenses still average in the six figures). The impact of IPRs has been modest, however. From the passage of the AIA through to the end of 2015, approximately 15,000 patents have been litigated in district courts. Only 15% of these have faced a challenge to their validity through an IPR.

Have previous patent reform efforts and court decisions eliminated my clients’ patent litigation risk?

No. Recently implemented changes like Alice and IPRs help address low quality patents, but they affect only a small percentage of overall litigation. So, while the risk of being sued in a less costly campaign may be somewhat reduced, the risk of being sued is still very real, and those incidents could have costs exceeding $1M.

So the impact of patent reform is real, but limited. Trolls are still spending hundreds of millions of dollars buying good patents and they are going to keep asserting them. In 2015 alone, 2,500 companies were sued at least once by trolls and every year the overall cost for companies – in legal expenses and litigation settlements – is in the billions. RPX is the only insurer that is mitigating the impact of the troll model by preemptively clearing those patents out of the pre-litigation market and/or active litigations. And we are the only company that can clearly quantify – and cost-effectively insure against – the risk those high-quality patents represent.

An RPX representative is available to support you on policy and legal discussions like this with your clients and prospects.

Is RPX a patent troll?

No, we aren’t. Trolls use their acquired patents offensively, targeting specific companies with accusations of infringement and using litigation to force payments. It is a business model based on extracting revenue from companies through litigation.

RPX, on the other hand, uses acquired patents defensively. We never assert our patents or sue companies to generate license payments. Our goal is exactly the opposite of trolls – we enable every company in our client network to save a great deal of money by avoiding costly litigation and broadly sharing the cost of licenses (and at a fraction of the price they would otherwise have to pay a patent troll). Furthermore, in offering insurance through RPX Insurance Services, we retain risk, which aligns our interests with those of our clients.

Isn't RPX feeding the trolls?

No, we aren’t. Our activities serve to shrink the troll problem into a smaller, tamer, and less dangerous risk.

This is true for a couple of reasons: 1) when we buy a patent before it can be used to threaten litigation, we prevent trolls from achieving any revenue or creating any unnecessary legal costs for its targets; and 2) when we do license a patent from a troll –we do so for far less than our clients would have paid to clear the patent on their own. We have preemptively acquired more than 18,500 patent assets and rights prior to and out of active litigation. We do not and never will offensively assert the patents in our portfolio. We contractually cannot assert our patents.

And remember, as an insurance provider, RPX is assuming a huge financial risk, so our whole focus is on reducing that risk, not feeding it. That’s why we are such a large-scale buyer of patents.

Still have a question?