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The vanishing shield: Why defensive IP insurance is more critical than ever

As PTAB challenges decline, patent litigation risks rise—IP insurance is now essential to protect companies from costly legal battles and claims.

12/15/2025 · 3 minute read

As patent litigation risk surges, companies are quietly losing one of their most valuable lines of defense: the ability to challenge accusations of patent infringement through the Patent Trial and Appeal Board (PTAB). The board hears appeals for certain patent decisions and decides on the validity of existing patents.

What was once a fast, technical, and cost-effective way to challenge questionable patents — especially those asserted by non-practicing entities (NPEs, or “patent trolls,” who acquire patents to profit through licensing or litigation) — is now slipping away due to changes within the PTAB. And this could have serious financial implications for organizations.

Rising PTAB denials forcing more entities to federal court

The PTAB was created under the America Invents Act to help companies challenge accusations of patent infringement without full-scale federal litigation cost. Historically, the PTAB provided companies accused of IP infringement with an efficient forum to argue that the asserted patent was invalid and therefore the case had no merit and should be dismissed.  This contributed to lower court caseloads, reasonable legal fees, and relatively swift resolutions.  

However, there have been reports of increases in denials by the PTAB. These so-called discretionary denials often stop the review process before it begins, even when the challenger believes they have a strong case.

The result? Companies are being pushed back into federal court, where litigation costs can be substantial.

For corporate patent holders, especially those in sectors targeted by NPEs, this shift means higher legal costs, greater exposure to meritless claims, and increased pressure to settle, even when they believe they have a winning case. The PTAB was once the legal “off-ramp.”  Now that exit has become very narrow.

How defensive IP insurance can help

With fewer procedural tools available, IP insurance becomes essential — not just as a risk transfer mechanism, but as a way to preserve operational and legal strategy.

Defensive policies can:

  • Cover legal costs from the moment a demand letter is received
  • Fund parallel defense efforts in court or in front of administrative bodies
  • Provide leverage in settlement negotiations by extending runway

For companies of all sizes — from high-growth startups to Fortune 500 businesses — IP insurance offers a level of predictability that is increasingly hard to find in today’s IP litigation environment.

The bottom line: As the PTAB loses its effectiveness as a corporate defensive tool, IP insurance fills the gap. It’s no longer a nice-to-have. It’s a critical part of any company’s legal risk strategy.

If you’re responsible for managing intellectual property risk, contact your Marsh representative for more information and to help you structure the most suitable solution.

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Paul Murray

Paul Murray

Senior Client Advisor, FINPRO

  • United States

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