Today, almost any business that uses basic technology is a possible target of non-practicing entities (NPEs), also known as patent trolls — the result of a patent system that has done a terrible job of evaluating software patents and a court system that hasn’t done much better at examining them.
RPX Corporation, a provider of patent risk management solutions, has introduced a new insurance service for businesses facing patent infringement litigation with patent trolls. As a coverholder at Lloyd’s, RPX Insurance Services, will provide marketing, underwriting, and claims management services on behalf of a syndicate at Lloyd’s – an insurance and reinsurance specialist that is typically the first to insure unusual and complex risks.
“Our approval as a coverholder at Lloyd’s further endorses our unique approach, and paves the way for RPX to offer a mainstream insurance product that could become as widely accepted as D&O or cyber liability coverage,” said John A. Amster, chief executive and co-founder of RPX, in a statement.
RPX’s new solution focuses on the underlying causes of patent troll risk. Through market intervention, RPX reduces risk by acquiring patents before patent trolls can assert them against its network of 168 clients. This acquisition activity has led to companies in the RPX network receiving more than 430 dismissals from over 60 litigations. Using the data from this acquisition activity to drive its actuarial model and underwriting methodology, RPX can model patent risk for policyholders and offer effective risk transfer.
In some cases, patent trolls are even forcing business owners to choose between paying employees and paying legal fees. In fact, patent litigation is costing companies worldwide almost $13 billion in defense expenses and settlements last year, up from roughly $5 billion in 2008. Research from RPX shows the volume of NPE patent suits over the past five years increased nearly 600 percent, from about 600 in 2008 to more than 3,600 in 2013, impacting about 8,000 companies in the same period.
As of December 2013, RPX had invested over $750 million to acquire more than 4,200 US and international patent assets on behalf of the 168 members of its client network in seven key sectors including consumer electronics and PCs, e-commerce and software, financial services, media content and distribution, mobile communications and devices, networking and semiconductors.
Amster said, “We hope this RPX solution can enable patent risk to become a reasonable and predictable line item in companies’ budgets, as opposed to the highly unpredictable risk it is today.”
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