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The insurance would cost more than the expected cost of the litigation which is of course how insurance works. They key with the patent system is that you have

by readams 10y ago

The insurance would cost more than the expected cost of the litigation which is of course how insurance works. They key with the patent system is that you have to pay millions to defend yourself, but it's exceptionally rare to be able to recover attorney's fees even if you win. So in the end it's a choice between capitulating and paying some amount (and perhaps unleashing more trolls in the future) or wasting millions and many many hours of your time over years of your life defending yourself. There's no way to win, which is why this is now a big industry.

LeifCarrotson 10y ago
The insurance would cost more than the expected cost of litigation for the average member. The vast majority of developers will never be sued, but you don't know if you will be among the unlucky few. See medical malpractice insurance for another example.
peeters 10y ago
> The insurance would cost more than the expected cost of the litigation which is of course how insurance works. The key with the patent system is that you have to pay millions to defend yourself, but it's exceptionally rare to be able to recover attorney's fees even if you win. If enough people buy insurance to make sure that the patent trolls never win, then there's no money to be made and the lawyers stop suing. So the price of insurance goes down. It's not like insuring against tornados, which are going to happen regardless of whether the houses are insured. Furthermore, you can state up front "IP Lawsuit Coverage provided by XXX" as a disincentive for people to sue their members in the first place.
- granos 10y ago
  They don't even have to never win. It just has to cost them enough that their margin is smaller than that of some other venture.
- gozur88 10y ago
  Yes. Their business model relies on the fact most people will settle if the offer is about the same cost as a successful defense or less. If they actually had to litigate all these cases they could never make money. My impression is they'd rather not go to court, since there's always a chance they could have their patent busted.
tedmiston 10y ago
Perhaps there are ways to defer the lawsuits for lengthy periods of time? (I don't actually know.)
nickparker 10y ago
This is a bit of a simplistic view... Insurance trades a slightly higher expected cost for zero variance in cost. For small companies, that's a great proposition because a small monthly fee can be planned for, while a patent suit is do or die find very expensive legal support.

by readams 10y ago

LeifCarrotson 10y ago

The insurance would cost more than the expected cost of litigation for the average member. The vast majority of developers will never be sued, but you don't know if you will be among the unlucky few. See medical malpractice insurance for another example.

peeters 10y ago

> The insurance would cost more than the expected cost of the litigation which is of course how insurance works. The key with the patent system is that you have to pay millions to defend yourself, but it's exceptionally rare to be able to recover attorney's fees even if you win. If enough people buy insurance to make sure that the patent trolls never win, then there's no money to be made and the lawyers stop suing. So the price of insurance goes down. It's not like insuring against tornados, which are going to happen regardless of whether the houses are insured. Furthermore, you can state up front "IP Lawsuit Coverage provided by XXX" as a disincentive for people to sue their members in the first place.

granos 10y ago
They don't even have to never win. It just has to cost them enough that their margin is smaller than that of some other venture.
gozur88 10y ago
Yes. Their business model relies on the fact most people will settle if the offer is about the same cost as a successful defense or less. If they actually had to litigate all these cases they could never make money. My impression is they'd rather not go to court, since there's always a chance they could have their patent busted.

tedmiston 10y ago

Perhaps there are ways to defer the lawsuits for lengthy periods of time? (I don't actually know.)

nickparker 10y ago

This is a bit of a simplistic view... Insurance trades a slightly higher expected cost for zero variance in cost. For small companies, that's a great proposition because a small monthly fee can be planned for, while a patent suit is do or die find very expensive legal support.