Thursday, 19 February 2009

Patent insurance: paying for the privilege

PatLit's previous blog finished with the comment that successful patent plaintiff Google was now chasing Hyperphrase for $500,000 in costs. If you can't collect the cash from the unsuccessful, you may find it equally tough recovering it from your insurance company, as disk drive maker Seagate Technology is finding. Having settled a patent infringement dispute against Cornice Inc. two years ago, Seagate is now suing National Union Fire Insurance Co. of Pittsburgh, which has paid just $4 million of the $10 million it cost Seagate to bring its action.

Seagate maintains that National Union gave it the green light to defend against Cornice's invalidity counterclaims. National Union denies liability and says Seagate, in defending the counterclaim, didn't comply with the "Liability Deductible Plan Endorsement" in the policy or the payment agreement. The dispute is heading for a full trial, following two abortive attempts at mediation, though it seems that National Union is seeking to invoke an arbitration clause.

PatLit makes two comments here. First, this blog wonders whether Seagate has been able to insure against the cost of suing its insurance company. Secondly, there's presumably some good news here for expert witnesses who, having established their credentials in patent infringement and validity suits, can build a second career by giving expert testimony in patent insurance litigation too.

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