Current Patent Litigation Costs Are Between $2.3 to $4M - from the BlueIron blog Startup companies need to have patent enforcement and defense insurance
Loveland, Colorado
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July 10, 2020 08:02 AM Eastern Daylight Time
Patent litigation in the US has two major stages: claim construction (sometimes called a Markman hearing) and a trial for infringement and damages. In a vast majority of cases, once the claim construction is done, the writing is on the wall and a settlement happens.
"With the cost of litigation at an all-time high, patent enforcement and defense insurance makes sure you have the ability to survive," says Russ Krajec of BlueIron, a patent-finance company.
The American Intellectual Property Lawyer’s Association (AIPLA) issues a bi-annual survey of IP-related costs. In the latest survey, the claim construction portion of a patent litigation ranges from $250,000 for less than $1M at risk to $2.375M for cases where $25M or more is at risk.
For the entire trial, the AIPLA says that for less than $1M at risk, the trial will cost $700,000, while the very high value cases will cost $4M or more.
“The AIPLA data says that with less than a million dollars at stake, both parties will have to spend $700K – or a total of $1.4 million dollars to fight a patent lawsuit,” says Krajec. “That is crazy that the expenses are so high.”
“Startup companies are always cash-constrained,” continues Krajec. “No startup has the cash reserves required to go up against a Big Tech company that decides they want to use the startup’s technology. Not only does this happen in technology-based companies, but it is standard practice with the life sciences space. Certain big companies find it cheaper to blatantly infringe a startup’s patents and just dare them to sue.”
Patent enforcement and defense insurance gives a startup the means to survive patent litigation, yet few startups bother to get these policies.
“Most angel investors who are board members require a startup to have director’s and officer’s insurance. Over the last decade there were fourteen patent lawsuits for every individual D&O claim,” says Krajec.
BlueIron is a broker for patent enforcement and defense insurance policies, including policies written by Intellectual Property Insurance Services Corporation in Louisville, Kentucky. “IP insurance is the only insurance we sell, as part of our whole patent-based financing options for companies from startups to publicly traded companies.”
Schedule a call with BlueIron and see if Intellectual Property Insurance is right for your company.
Learn more about Patent Litigation here on the BlueIron blog.
Learn more about BlueIron's IP insurance here.
