Patent Liability Insurance

[Marc Whipple]

Note: While I am an attorney and licensed to practice before the USPTO,
this is not legal advice.

>One of the risks we see in creating an open-source project is the 
>possibility of being sued for inadvertently reinventing someone else's 
>patented idea.  Basic due diligence may be enough to avoid a copyright 
>infringement, but we aren't sure if that is the case for patents. 

That depends on what risk you are looking to mitigate. If you are
worried about the more serious kinds of sanctions that willful
infringement can subject an infringer to, basic due diligence should
suffice. If you perform due diligence and have no reason to believe that
you are infringing a patented invention, you avoid the really killer
sanctions for the most part.

If you are worried about legal sanctions for basic infringement
(ordinary damages, injunctions, etc) then no amount of diligence will
save you. There is no real defense to patent infringement other than not
to do it. If the claim reads on your product, you're done. Due diligence
could help in that it might prevent you from practicing an infringing
device or method, but not in defending such practice.

>Patent searches could prove too expensive for many open-source 
>projects.  

Patent searching has gotten remarkably cheap in the age of the Internet.
In fact, a reasonably competent person can perform some elements of the
initial search themselves, for free, on the USPTO's website. I would
strongly suggest that those who aren't good at reading legalese - by
which I do not mean non-lawyers, I know non-lawyers are good at it and
lawyers who aren't - ask an experienced patent attorney to examine the
results of the search, or, if in the least unsure of how to properly
design such a search, to consult a patent search firm or patent
attorney.

>The cost of defending a patent infringement suit could put 
>many open-source projects out of existence.  Are there inexpensive ways

>open-source projects can mitigate the risk of inadvertently infringing
a 
>third-party patent? 

That depends on your definition of inexpensive. For garage inventors (or
home-office programmers, if you prefer,) the answer is, sadly, "Probably
not." There are just too many patents.

>I understand that is possible to purchase patent liability insurance.  
>How much does patent liability insurance typically cost? 

Like any insurance it depends on the coverage. I looked into a general
policy for the invention studio where I worked many years ago. The
premium for a policy with coverage broad enough and limits large enough
to do any good would have been a significant percentage of our gross
revenues in a good year. It's not cheap.

>How do most 
>open-source projects raise the revenue to pay for this insurance?  Do 
>any of the many foundations that assist open-source projects (Apache, 
>Mozilla, Eclipse, FSF, etc.) offer this insurance for the projects they

>host?

I don't know that. I would be very surprised.

>Most open-source licenses I have seen disclaim any warranty of patent 
>non-infringement and therefore shift the legal risk onto the users.
Are 
>the users of open source software therefore expected to purchase patent

>liability insurance? 

"Expected" may be too strong a word. I suspect that most contributors to
Open Source don't think about whether users should or shouldn't get it
in the first place. However, I will gladly defer to other more
experienced voices.

M