This is from a 10-K, so it seems the BOD was certainly aware of D&O Insurance:

"Selling, general and administrative expenses decreased from approximately $4,972,000 for the fiscal year ended May 31, 2008 to approximately $3,940,000 for the fiscal year May 31, 2009. The decrease consisted of approximately $811,000 in legal and accounting expense, primarily due to a settlement with a former officer of cash and stock in the prior fiscal year, a decrease in general legal matters, approximately $111,000 in public and investor relations expenses, approximately $28,000 in consulting expenses and approximately $45,000 in D&O insurance expenses.

One dreads to thinks how much D&O Insurance cost BEFORE the reduction!

http://www.faqs.org/sec-filings/100816/PATRIOT-SCIENTIFIC-CORP_10-K