Patent Infringement Insurance
Patent infringement insurance is an insurance policy provided by one or more insurance companies to protect either an inventor or a third party from the risks of inadvertently infringing a patent.
For inventors, patent infringement insurance covers legal costs in case they have to sue an infringer to enforce their patent.
For third parties, patent infringement insurance covers their legal costs in case they are sued for patent infringement by an inventor.
Patent infringement insurance is generally considered too expensive to be worth it. The premiums must be high, however, due, at least in part, to the high legal costs of patent infringement cases. A typical patent infringement case in the US costs 1 - 3 million dollars in legal fees for each side. This is despite the fact that 99% of all patent infringement cases are settled. Legal fees in pharmaceutical cases can run 30 million dollars or more, although this should be contrasted with the fact that billions of dollars may be at stake.
In June 2006, a Study for the European Commission on the feasibility of possible insurance schemes against patent litigation risks was published. The report concluded that the continuation of the status quo with very little, disproportionately expensive, bespoke patent litigation insurance (PLI) would not meet any objectives for a feasible insurance scheme. Instead, only a mandatory scheme was considered to be viable in order to provide the economic and technical benefits to the EU and individual patentees which would arise from a widespread PLI scheme.
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