Lawsuits are something no one likes talking about. They can happen to any business and are hard to plan for. But because people don't talk much about them, there's a lot of confusion about what a lawsuit is and what risks a business is actually exposed to.
This is especially troubling for IT businesses because tech lawsuits are a serious risk.
The Insurance Journal reports that tech giant Apple recently won a $119.6 million lawsuit against fellow smartphone maker Samsung. The case has received a lot of media attention because Apple claimed that Samsung infringed on multiple patents related to its ever-popular iPhone.
By looking at this case, we can learn about tech lawsuits and shed some light on a scary topic.
Apple and Samsung Lawsuit: Why Tech Lawsuits Are a Disaster Waiting to Happen
The Apple vs. Samsung dispute can tell you everything you need to know about lawsuits. For starters, lawsuits can take years. Apple filed its first lawsuit against Samsung in 2012, but these cases are just now being resolved.
When a company is served with a notice that it’s been sued, the actual trial likely won't happen for at least a year. Before the trial, there's a long process called "discovery" in which each party's lawyers request evidence from the other side. In that time, your lawyers prepare your case.
Once the trial starts, it can last for weeks – Apple's most recent lawsuit lasted a month. Even after a trial is over, there might be appeals and countersuits. Sometimes being sued is like a bad sitcom. Just when you think it's over, there's a spinoff. The process can go on and on, and by the end of it, you might have spent tens of thousands of dollars in legal fees.
(For more information on IT lawsuits, make sure to read "What to Do if You're Sued: A Practical Guide.”)
Here's how the Apple vs. Samsung lawsuit went down. First, Apple sued Samsung and won. Then Samsung appealed and argued that the jury was biased. Then there was a retrial for the amount of damages, which Apple also won. While that was going on, Apple filed a second lawsuit, which it has now won. All told, the process took two years.
Why Lawsuits Are Especially Bad for IT Companies
Lawsuits in the tech world are unpredictable. It can be hard to know which way a judge will rule. A case hinges on how well the judge and jury understand the technology and software you use and their legal interpretation.
The New York Times reports that jurors in the Apple vs. Samsung case had to decide on 700 different questions about the dispute, including some highly technical questions about patent infringement and mobile devices. Imagine the fate of your business resting on how well a group of 12 jurors is able to understand IT issues. Oh boy.
How Does IT Insurance Protect You From Lawsuits?
Before we go into lawsuit coverage and IT insurance, it's important to note that the Apple vs. Samsung dispute was over patent infringement, which isn't covered by many standard small business insurance policies. Nonetheless, all the lessons about the headache and hassle of a lawsuit still apply. With that said, let's take a look at how IT insurance can cover your liabilities.
IT business insurance, such as Errors and Omissions Insurance, protects your company from lawsuits in two ways:
- It pays for the cost of your legal defense and covers the damages you owe the other party.
- It pays for settlements, which occur when both sides of a lawsuit agree on an amount of damages and resolve the issue without having to go to court.
This second reason is one of the major benefits of IT business insurance. Rather than spending years in litigation, you have an insurance company's lawyers working to resolve the issue as quickly as possible, saving you from the headaches that Apple and Samsung know all too well.
Small businesses aren't like Apple. You don't have a budget that can spend millions of dollars on legal expenses to protect your company. Errors and Omissions Insurance provides a vital safety net for small IT companies.
For a free quote on this coverage, submit an online insurance application today.
