It is ridiculously disheartening that this sort of thing even has to exist.

It's just taking the money you'd be forced to pay some exploitative patent troll, and giving it (well, probably/hopefully less of it, but still) to an exploitative insurance firm instead.

The insurance firm isn't exploitative. The patent troll is actively harmfully attacking people. The insurance firm (assuming they aren't secretly creating demand for their product) is mitigating the damage.

Locksmiths and firefighters aren't exploitative.

Insurance doesn't mitigate damage, it amortizes it (typically across a group of entities). The expected average annual claims on an insurer's policies need to be lower than the sum of the premiums or the insurer loses money.

This is why people in high risk categories pay more for insurance (eg young people and people with high performance cars have higher car insurance premiums because statistically they crash more often and/or have higher rates of total loss)

The insurance being used to fight the patents seems good: it's effectively a way for the group to pool resources towards not paying out to patent trolls. The success of the insurance company should be based on the reduction of payments to trolling, even when counting the insurance as paying to patent trolls

What'd be most disheartening is if the insurance was just to pay off the patent trolls

> The expected average annual claims on an insurer's policies need to be lower than the sum of the premiums or the insurer loses money.

All this time I thought they invested the float.

In this case it does because someone with insurance is a poor target for patent trolls. Assuming it becomes common you get 'herd immunity' as patent trolls become less effective which also lowers the cost of the insurance.

Also, "I have legal insurance, you can talk to my lawyers" might be a turn-off for trolls, effectively diminishing what would be spent in this specific case.

Well, yes and no. For the single insured it is there to mitigate damages that otherwise would be catastrophic. I hope that I will lose money by buying insurance, because that means nothing really bad happened to me.

Normally you'd be correct, but in this case troll insurance actually produces a game theoretic reduction in trolls. Going to court costs trolls resources, time if not money. By guaranteeing that all trolls will be fought tooth and nail, it makes trolling more costly, which makes it less attractive, which means there will be less of it.

Two problems:

First, you won't be able to get insurance for this case, because it predates your policy. A bit like getting fire insurance when your house is already on fire.

Second, an insurance company won't just write you a blank cheque for legal fees, they will take over the case and look for the cheapest way out, which will probably be settlement.

An insurance company dedicated to patent trolls might have a policy of fighting every case in court. If you have the resources to back up this threat, it means patent trolls are much less likely to actually go to court.

Hence, specific insurance against patent trolls could work by effectively taking away the easy targets for patent trolls. It's a bit like home-insurance companies that offer discounts on good locks to keep out thieves. Everyone except for the criminals are better off afterwards.

Yes, hence why I pointed out it didn't help in this case (there's already an NPE demanding license fees).

I don't know if the second point is a big deal. Even if they choose to settle, you've still mitigated your risk without going to court. And I suspect a patent litigation insurance agency is going to be motivated to negotiate very small settlements and/or actually fight it out in court, lest they gain a reputation as the company that hands out license fees.

Do you know what's the ballpark cost by any chance?

I got a quote from them 2 or 3 years ago for a company and the amount was for $7K/year. RPX said they came up with the price based on the likely danger of patent trolls to this company, so I don't know if the price they would quote now or to another company would be the same.

That's pretty reasonable compared to the litigation costs.

I wonder if they patented the "business process" of selling insurance against patent trolls.