Patent Troll Suits Threaten Company Strategies and Funding
- 60% of patent troll suits target companies with revenues of less than $100M—a segment of the market often particularly focused on growth.
- For these companies, average costs to resolve a single suit are about $200,000—with the most expensive cases topping $2 million. More than 50% of those costs are legal costs.
- VCs are less likely to fund companies that have faced a patent troll suit, resulting in about $22 billion per year in lost funding, according to a recent MIT study.
How RPX Insurance Protected A Company’s Multimillion-dollar Growth Initiative
For most companies, heightened exposure to patent troll attacks comes hand in hand with increased funding, visibility, and growth. Yet a majority of these companies have a gap in their insurance coverage that leaves them vulnerable to debilitating financial loss from patent litigation.
One RPX insurance client—a successful telecommunications startup—was several months away from a planned IPO when it was sued for patent infringement. The company immediately filed a claim.
After quickly accepting the reported event as a covered claim under the client’s RPX insurance policy, RPX identified the lawsuit as part of an infringement campaign against dozens of large and small companies. Already familiar with the plaintiff and having determined an opportunity to clear related risk for multiple clients, RPX negotiated and finalized acquisition of the rights to the asserted patent portfolio and licensed all relevant RPX clients—ending the litigation at no cost to the insured within 60 days.
With its IPO imminent and many millions of dollars at stake, this client required quick resolution to protect its budget and its reputation among investors. Through its relationship with RPX, the company never had to retain outside counsel, avoided all legal, settlement, and transaction costs, and proceeded with its IPO—eventually growing in size by tens of millions of dollars.
How You Can Help Your Clients
Patent insurance from RPX Insurance Services offers your clients unique protection unavailable from any other provider, combining traditional claims-paying policies with litigation-prevention and low-cost litigation resolution services.
- Cap exposure to patent litigation costs – both legal and settlement
- Reduce per case costs through claims support by ~60%
- Simplify case management through our litigation expertise
Premiums start at $1,500.
Question of the Month
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.