For many fast-growing companies, a large portion of book value is based on intellectual property. These intangible ideas could be exceptionally valuable and support future growth and financial success – and they should be covered by intellectual property insurance.
What is intellectual property insurance?
Intellectual property insurance is specialized coverage that protects your business against the legal costs associated with defending or prosecuting an allegation of intellectual property infringement.
Properly protecting your IP in this way will make it easier to take action against those who steal or copy it.
There are various products of IP insurance, including damage cover and cover for loss of income in the event of loss of IP rights.
Enforcing and defending your IP
As anyone who has been involved in IP litigation will testify, this can be a long, drawn-out and extremely expensive process. With the added threat of injunctions and lost income, the damage could be irreparable.
Not only can IP insurance protect against legal costs and resulting awards, but it can also cover various loss mitigation measures (such as counterclaims and product recalls) and provide financial support to minimize reputational damage or protect your brand.
Should the claim be successful, the cover may also provide some financial relief in the form of refunds and lost future profits.
That’s all great from a defense perspective, but what insurance can also provide is the financial support to take legal action against a party that has infringed your intellectual property, which could be the cornerstone of your entire business model.
Risk management
It goes without saying that, as with any form of insurance, it is expected that sufficient attention is paid to understanding and managing your risk. Depending on the nature of the intellectual property, whether patent, trademark, copyright or registered/unregistered design, you need to be confident that you have legal ownership/rights and/or exclusive/territorial rights has.
That’s why understanding your colleagues and your competition is just as important when it comes to your intellectual property, as is common in other parts of your business. If you are not familiar with what already exists, you are obviously more likely to infringe on it.
However, from an underwriting perspective (of the insurer), conducting the relevant investigations and filing the correct declarations is absolutely critical. This can be a time-consuming activity and interpreting and understanding existing documents can be a complicated process. If you are unsure, you should definitely consider hiring a patent and trademark attorney or similarly qualified legal advisor.
The government portal offers some insightful articles, reference points and external links to help you in this area.
Taking the next steps
If your company is working on a new innovation, you need to take action now to ensure you are well protected.
IP disputes occur all the time. A notable case was in 2015 between Nokia and a small British start-up technology company called Lowdown. In a true David versus Goliath situation, Nokia has denounced the smaller company for using the word ‘Here’ in its ‘check-in’ location app, stating it infringes on their own ‘Here ‘ brand name for apps and software related to maps and navigation.
Cases like these just show why IP insurance is so important in today’s business environment.
More about protecting IP
Protecting IP in China – Despite China’s questionable record in defending intellectual property, the experience of British company Strix suggests that officials are increasingly recognizing the importance of protecting companies’ rights
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