Many IP holders involved in infringement disputes are unable to initiate, or defend against, legal action due to excessive costs and inherent risks associated with litigation. Inaction can lead to both reputational and financial harm whilst also calling into question the value in securing intellectual property protection in the first place.
However, purchasing intellectual property insurance through a trusted intellectual property insurance broker can add real value to your business. Such policies will cover the costs of both defending against claims of infringement of third party rights; and enforcing your own rights against infringers. Policies are purchased annually, and cover court fees, own-side costs, and third party costs.
1. Protecting cash flow
Intellectual property litigation can be hugely expensive and can have a devastating impact on the value of a company. Right-holders often cannot afford to take decisive action which reduces the value of the intellectual property and the business itself.
Good insurance policies will cover the cost of litigation allowing you to take swift and decisive action without affecting the financial position of your company.
2. Providing a deterrent
Once you have purchased an insurance policy don’t be shy about adding this to your marketing literature. If a potential infringer knows that IP insurance is in place they will think twice about copying your invention, brand, design, technology or creative works.
3. Improving your negotiating position
If you are involved in litigation and your opponent knows you have the benefit of an insurance policy you are less likely to have to settle on unfavourable terms, thereby limiting the risk of unsuccessful litigation. Litigating from a position of strength can also generate licensing opportunities.
4. Giving you the ability to indemnify large licensees
It is often the case that larger customers/licensees demand indemnification against the costs of intellectual property disputes. In many cases it would be unwise to give such indemnities without the benefit of an insurance policy to protect against these sizeable risks.
5. Adding value when licensing or assigning your rights
Having an insurance policy for intellectual property in place will give comfort to a licensee that if an issue does arise, you, as the licensor, have the resources to take decisive action. Similarly, having insurance in place makes your intellectual property more attractive to a purchaser if you are looking to sell your rights.
6. Reassures lenders and investors
In the modern economy most business value does not lie in tangible assets. Nowadays, a business’s real value lies in its intellectual property. Having IP insurance in place gives lenders comfort that resources are available to maintain the value of the right if it is infringed. It also shows prudent planning and an understanding of the importance of intellectual property to your business.
Considering the amount of money spent on intellectual property (in the form of R&D and marketing) and the financial damage litigation can inflict, can your business afford not to have intellectual property insurance?
7. How do I get insured?
As a firm of patent attorneys we cannot positively recommend any particular insurance policies or provide financial or insurance advice; however, we can put you in touch with a specialist insurance broker. Contact Us for details.