Your Clients’ Patent Litigation Risk: Three Key Questions
Last month we explored why nearly any company is at risk of patent infringement litigation. So, are some companies more at risk than others? Determining how much risk a particular company faces depends on a variety of factors, the most important of which are revenue, sector, and litigation history.
Here are three key questions to ask in order to understand the scope of your client’s patent litigation risk.
What is my client’s annual revenue?
As a company’s revenue grows, so too does the price tag to resolve a single litigation. Emerging growth companies—those that have revenues of less than $100 million—can pay as much as $2 million to resolve a single suit. The expense of patent litigation is much higher for larger companies—those with revenues of $10 billion or more—with the most expensive cases for these companies reaching above $15 million.
In what sector or sectors does my client operate?
Technology sectors experiencing rapid growth are often prime targets for increased patent litigation risk. For instance, as the Internet of Things sector grows, an array of companies doing business in this sector—including household appliance makers, home security system providers, wireless carriers, and many more—are finding themselves targets of patent litigation.
Other, more established sectors have their challenges too. Companies operating in the Consumer Electronics, VOIP and Networking sectors see a steady stream of patent litigation, and also often face higher costs compared to companies in other sectors.
Has my client had any previous patent issues?
Perhaps the most important factor to consider is the company’s previous experience. Any history with assertion letters, indemnification requests, and of course, litigation are excellent indicators of what’s to come. Being sued just once for patent infringement makes a company a prime target for additional suits down the line. Each year, more than 1,500 companies are sued for the first time, making them more vulnerable for additional patent infringement suits in the future.
With perspective on these three questions, and using our actuarial modeling, RPX can provide a comprehensive view of your clients’ risk over the next 12 to 18 months. In understanding this risk, we’ll discuss with you how to effectively and strategically manage your clients’ risk through available limits, retentions, and other risk management tools. In combining a traditional claims paying policy with active risk management, patent litigation insurance from RPX can reduce an insured’s overall time in litigation and can reduce per-case costs by as much as 60%, no matter the amount of risk a company faces.
Question of the Month
Why should my clients be interested in patent coverage?
Patent risk is unpredictable, disruptive and expensive, and it is an insurable business risk like any other.
With the cost to resolve a single patent infringement suit costing upwards of millions of unbudgeted dollars, patent insurance caps financial losses and provides your clients with predictability—an affordable 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.