-----Original Message-----
From: Radcliffe, Mark [mailto:Mark.Radcliffe dlapiper.com]
Sent: Monday, May 14, 2007 8:32 PM
To: Marc Whipple; Bruce Alspaugh; License Discuss
Subject: RE: Patent Liability Insurance
>Virtually all open source projects and open source
companies with whom
I
>deal do not perform patent searches for the following
reasons:
>1) They are expensive and patents are difficult to
interpret in the
>software market
While I agree that patent searches of the level which would
be prudent
for, say, the release of a major new commercial product are
expensive
and time-consuming, I still think that a competent
individual can
perform a basic search on their own initiative. I agree that
software
patents are ridiculously difficult to interpret at times
(not unique to
software patents.) It is my fervent hope that the recent
USSC decision
in KSR will pitch about ninety-five percent of them to the
curb.
>2) Patent applications are confidential until either
publication or
>issuance of the patent; consequently a search today may
be irrelevant
if
>the patent application is issued as a patent the next
day
Technically true but logically, a reason never to do
anything at all. I
don't think you'd agree that the fear of submarine patents
should
prevent all commercial activity. Hadn't you rather know than
not, if you
could?
>3) If you find a relevant patent you are then
potentially liable for
>willful infringement and, thus, treble damages
It's true that in some circumstances you are better off not
knowing than
knowing. However, if you don't know, and commit major
resources to a
product that cannot be sold, the fact that you avoided
treble damages
may be cold comfort for the fact that your product is still
a bust,
you've still wasted time and resources, and, if you made a
major
commitment to the product, your company is now in serious
financial
trouble.
>I don't agree that you have no real defenses to patent
infringement:
the
>patent may not meet the statutory requirements of
novelty, non
>obviousness and utility, it may have been filed after
the one year
>statutory bar and it may not cover your particular
product.
Ah, perhaps I was overly precise. None of these are defenses
to patent
*infringement.* They are attacks on the patent itself.
Obviously if the
patent is void, you can't infringe it. However, if the
patent is good,
there is no defense to infringement, unlike, say, copyright
infringement
where independent creation is, under US law, a complete
defense. The OP
was talking about that issue and so I answered in that
context. I agree
that if you successfully attack the patent, the *result* is
logically
equivalent to defending an infringement claim - IOW, you
will not be
liable for damages or subject to injunction.
>The problem
>is that proving these defenses is very expensive.
You said a mouthful, there.
>I am not aware of any
>company or project with patent insurance because it is
expensive and
>coverage is limited.
I am, but they are multi-billion dollar corporations (and
not all
corporations in their industry do: some of them self insure.
It depends
on what their beancounters tell them the odds play is.) None
of them are
computer software makers (which doesn't mean that no CSM
have insurance,
I just don't know about them.)
M
-----Original Message-----
From: Marc Whipple [mailto:MWhippleitsgames.com]
Sent: Monday, May 14, 2007 2:57 PM
To: Bruce Alspaugh; License Discuss
Subject: RE: Patent Liability Insurance
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
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