Personal loans – such as a mortgage or automobile purchase financing – require that the borrower purchase insurance to cover at least some of the lender’s risk. Business loans and venture investments are no different and a variety of insurance products are available to ensure a wide variety of entrepreneurial endeavors.
Although the particular order is rather mundane, the factual background of the investment/insurance in ABC v. Ironshore Speciality Ins. (2nd. Cir. 2014) is quite interesting.
Eidos holds several patents, including the U.S. Patent No. 5,879,958 covering certain LCD displays. In 2010, Eidos obtained financing from Stairway Capital in order to fund its patent enforcement litigation campaign. As part of the deal, Eidos also obtained insurance from Ironshore to cover the loan payable if the campaign fails to recoup at least the loan amount. The infringement litigation was still ongoing in 2013, but Ironshore must have predicted a bad outcome and filed a demand for arbitration of its contention that the insurance policy was void ab initio. And, the appellate order linked-to here affirms the lower court order requiring non-binding mediation followed by arbitration if necessary (as spelled out by the contract). The patentee had raised a new argument on appeal that the panel refused to hear.
In the parallel infringement litigation, the patent has now been found invalid as indefinite. That decision is apparently on still appeal to before the Federal Circuit.