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Comment by 6stringmerc | Hacker News Reader

So, no attempts to bring Davis in front of the Texas BAR association for unethical practices?

I'm also curious why numerous developers have not demanded an Insurance Protection Product / Plan that would take a premium in return for subrogation (defense) if a frivolous Patent Suit is filed. I'm rather certain the market exists and while it may be for larger businesses or players, developers forming a Mutual Company and writing on some big name AM Best A paper (or even going to Lloyds) could be helpful.

Anybody know of such an organization or idea?

I guess my line of thinking here is that "Yes, this is totally unfair and rigged" and then move on to "How do I work around the issues, at least to a limited extent, to avoid these pitfalls?" Sign me up for reform, sure, I'm all for it. Until then, I don't like banging my head against walls, I prefer to figure out ways around or over them.

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Side note: "bar" as in bar association is not an acronym. It refers to the literal bar or barrier in courtrooms which divides participants from the public.

https://en.wikipedia.org/wiki/Bar_(law)

> I'm also curious why numerous developers have not demanded an Insurance Protection Product / Plan that would take a premium in return for subrogation (defense) if a frivolous Patent Suit is filed. I'm rather certain the market exists and while it may be for larger businesses or players, developers forming a Mutual Company and writing on some big name AM Best A paper (or even going to Lloyds) could be helpful.

It would be very cool if company such as NewEgg could offer this - they already have the in-house counsel/expertise; and since the number of people trolled is very small, I'm sure even a small premium would be enough to cover it (provided you have enough customers).

There are firms that offer patent infringement insurance services. The cost is astronomical (7 figures per year).

I have a fair amount of experience with patent trolls.

I've seen companies sued for using facebook, where the damages are X dollars times the number of facebook followers/posts/comments they have. (So the level of risk is very hard to estimate for an insurer, because interaction numbers on the internet can spike easily)

Also, the the troll will practically _always_ offers a settlement that is roughly equivalent (or a few percent cheaper) than the legal fees to defend and win the case. -So a company has two options: Spend Y dollars to make it go away; or Spend Y*0.99 dollars and a year of wasted time to _maybe_ win. The system is setup such that Patent Trolls can't lose and companies can't really win.

I suspect part of the problem is that the monetary and time costs of litigation could not be easily measured. Every case would be, effectively, unique. Not insurmountable, but I have to imagine that the premiums would need to be very high.

On aggregate, the jurisdiction that patent trolls sue in can handle only so many cases, so it only takes a legal team of a certain size to defend every patent lawsuit in it.

And as a bonus, you can generate a Newegg-like reputation to convince people that you're not worth bothering.

The point raised you're responding to was a good one, and I thank you for adding context. I was under a similar impression, in that for this individual to be able to sustain a case for 4 years, then it has not, from my gathering, bankrupted him or been financially catastrophic. There is a nuisiance factor that, I think, Patent Troll firms like to employ - aka - cheaper to settle than to fight can apply to both time and money.

Pooling these cases, and the information gleaned from the tactics, might reveal patterns and/or pressure points for resistance that an Insurance Team would be willing to underwrite and hire defense for. The point is that if the Insurance Team is good at getting results, then in theory, fewer Patent Troll cases will arise, and the Insruance Company gets to pile up reserves for potential cases and make a profit concurrently.

Then, as you mention, just being a vetted participant and using the logo "Insured Against Patent Trolls By XYZ" can be a deterrent. Takes time, I understand, and it may be a very limited market. I'm just curious if the math and legal defense strategies can be combined in some ways. Thanks again for your postulations.

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.

> 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.

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.

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.

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.

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.

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

There are companies which offer litigation insurance (someone I know recently got some for a potential lawsuit). But AFAIK, they generally require you to present your case along with expert legal analysis to them before they'll even set a price for the insurance. Which goes back to one of the problems with patents -- there are so many of them which are bogus, how could you ever do a truly exhaustive review of potential infringement?

It exists. Kind of. I know there's a company called LegalShield, and I'm sure LegalZoom has its own version of it.

How would the insurance policy differentiate between patent trolling and legitimate patent abuses? Because I could foresee a company purchasing this insurance and then willy-nilly violating patents to their hearts content.

Simple contract language. There's no compulsion for a legitimate Insurance Team to undewrite a fraudulent risk, and that language will be included in the contract/agreement. I do think it of akin to Auto Insurance Companies in the US being able to deny a claim if the Claimant was doing something against the policy, e.g. "You were street racing and therefore we are not covering your liability" is a seemingly proven out.

The insurance company could cover legal costs, but only until they lost X of your cases (for small X).

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