Intellectual Property insurance has been designed specifically to protect insureds against the often substantial costs and losses that can arise from intellectual property related disputes. It therefore can cover all forms of intellectual property rights from copyrights and trademarks to complex areas such as patents and trade secrets. It typically covers four core exposures, namely infringement liability, IP rights protection, enforcement, and contractual disputes and obligations.
IP risks are abundant in today’s economy and can affect all businesses regardless of their size or sector. It’s important to note that you don’t need to own IP to have an IP exposure. Any organization that creates manufactures, offers, or delivers goods or services could potentially infringe on the IP rights of another party.
A good example would be a retailer, which will probably not have designed or developed any or all of the products they sell, but they could find themselves the target of an infringement suit or demand letter alleging that they’re selling or even offering for sale of good source services is infringing third party IP rights.
Of course, in this modern online world, a third party could also sue the retailer due to the technology or processes used in their website check out or point of sale technologies being the cause of infringement.
However, sectors that have particularly strong buying demands include technology, software, financial institutions, life sciences, transportation and manufacturing. In terms of company types, all can benefit from IP insurance, from startups wanting to protect their IP as they may not have the resources to fight costly battles to mature businesses wanting to focus on their infringement and contractual liabilities.
Intangible Assets of which IP is a key element are often the key and most valuable assets in business these days. Yet they’re often overlooked by traditional insurance solutions. IP litigation can be extremely expensive and often runs into millions of dollars. Without insurance, the costs of defending an IP lawsuit, even if you’re in the right, can be financially disruptive.
IP insurance coverage can be tailored to meet the needs of insureds depending on their specific circumstances. For many, it’s knowing that should the need arise to defend against infringement issues or to enforce their own IP rights when infringed, the business is not exposed to undue pressure on its day-to-day cash flows from legal fees, settlements, or damages.
If a business is required to indemnify customers in existing agreements or in winning new contracts, having those indemnity obligations insured can not only provide financial security for the business, it can also serve to improve contract negotiations when competing for the business.
It can also serve to support the business in taking the commercial decision to enter new sectors or geographies, by removing some of the financial exposures to unknown jurisdictions or competitive environments.
Additionally, it can provide access to knowledgeable counsel in these areas if required. In short, IP insurance can be a strategic product for companies by providing financial protection for high risk exposure that can affect all business types.