Is it worth getting a patent?

Question: Is getting a patent really worth anything?  That is, are the individuals or companies that have patent rights in the insurance industry actually enforcing them through patent infringement lawsuits?

Answer: In general, insurance business method patents are too new yet to have generated a lot of infringement lawsuits and the licensing and legal activity that surrounds enforcing patents.  One notable exception is the patent infringement and theft of trade secret lawsuit that Bancorp Services brought against Hartford Life Insurance Company.  The patent owner, Bancorp Services, was paid $80 million dollars by Hartford to settle the case. Strictly speaking, this was not a pure patent infringement case since another IP issue, violation of a secrecy agreement, was involved.  However, the validity of the patent was upheld on appeal so insurance business method patents are clearly enforceable.

The decision to file a patent in the first place (in answer to the first part of the question) is a business decision based on the commercial possibilities of the invention.  That is, with some exceptions, there is no point in filing a patent and incurring the cost of doing that unless one has a reasonable expectation that his or her invention has commercial value worth protecting.  This value is captured by either bringing an exclusive product to market, or licensing the patent to a third party.  Insurance products are relatively easy to copy so a patent is probably the only way to retain a right to license use and generate value. 

If patent infringement is believed to have occurred and if a licensing agreement cannot be negotiated, then a patent infringement lawsuit may be necessary.  A patent owner shouldn’t do anything, however, without first consulting proper legal counsel and making a realistic assessment of the cost, effort and potentially recoverable damages.  Patent infringement lawsuits can cost millions of dollars in legal fees and take several years to reach a settlement.  There is also the threat of countersuits against the patent owner for things like anticompetitive practices. 

Hopefully the insurance industry will quickly learn that patent rights are to be respected.  This will minimize the need for expensive and disruptive patent infringement lawsuits.