While intellectual property (IP) insurance may not suit every business, it can offer significant advantages. Since all businesses possess IP, which could be their most valuable asset, you can secure insurance to safeguard it from potential risks. The majority of this insurance is geared toward businesses that have already acquired IP rights, but it can also shield you from accidentally violating the rights of others.
To determine whether investing in IP insurance is worthwhile for your business, you should first identify, comprehend, and potentially secure your IP. This will help you assess if your business can derive benefits from IP insurance.
The Intellectual Property Office (IPO) provides free online tools to help people learn about trade marks, designs, patents, and copyright.
What IP Insurance is available?
Various types of IP risks can be covered by insurance products, including one or multiple rights. These products include “opinion only,” which covers legal expenses for obtaining an opinion on the possibility of successfully enforcing or defending an IP claim, “enforcement and defense,” which covers legal costs for taking action against those who infringe on IP rights and defending allegations of infringement, “damages,” which covers the payment of damages if an infringement action is lost, and “validity,” which covers legal costs for defending challenges to the validity of your rights.
Other insurance products, such as “lost revenue” which covers revenue lost due to losing IP rights, “indemnity” which covers liabilities resulting from guarantees given to third parties, and “cyber” which covers losses due to various cyber incidents, including IPR breaches, may also be considered.
Depending on your industry or sector, certain products may be more relevant or appropriate than others, and Connect can provide support on this matter.
We will offer guidance on all aspects of the policy, including which expenses are covered in the event of a claim and what the insurer will pay out if your case is settled early. It is important to note that the costs you recover may be subject to excess and co-insurance and must be reasonably and appropriately incurred. Additionally, you may need to seek the insurer’s permission before incurring certain costs, which your legal representative can advise you on.
Your policy document will outline not just the “reasonable prospect of success” test but also the terms of settling your dispute. The insurer will expect you to make every effort to recover costs from the opposing party, which may result in disagreements between you and the insurer in some cases.
What is covered:
- Defence Costs and/or damages for intellectual property actions brought against you
- The defence costs may include experts’ fees
- Extensions of cover include defence costs incurred for directors’ infringement where they are brought into an action, obligation to contracting parties and product infringement recall costs
- Choice of limits of indemnity (any one claim and in the aggregate) of GBP 100,000, GBP 200,000, GBP 250,000, GBP 500,000 and GBP 1,000,000.
- Assertion costs for intellectual property actions brought by you.
- Assertion costs may include experts fees
- Extensions of cover include contractual disputes
- 50% of the chosen limit of indemnity under OPUS Sentry
- First Party Loss arising directly from a claim under OPUS Sentry.
- 25% of the chosen limit of indemnity under OPUS Sentry
What isn't covered:
- Costs incurred without insurers’ consent
- Any co-insurance amount and the amount of excess or deductible you are responsible for and shown in the Schedule;
- Any claim not involving the business activity declared and shown in the Schedule;
- Any criminal proceedings;
- Any claim falling outside of the Territory shown below (see Where am I covered) and in the Schedule;
- Civil claims relating to injury, disease or death;
- Any payroll related costs, including witness attendance costs that are incurred by any person representing you as an employee or internal staff
- Circumstances which you knew or should have known or occurred prior to inception of the policy;
- Any taxes, fines or penalties, consequential damages, punitive or exemplary damages or any other non-compensatory damages;
- Costs incurred in procuring, prosecuting, maintaining, monitoring or collating your intellectual property;
- Damages for wilful infringement and any future or on-going royalties;
- Any claim relating to domain names where you fail to seek resolution through ICANN;
- Any costs awarded against you as a result of you behaving unreasonably and unacceptably;
- Any costs of a counterclaim unless it is as defined in the policy document.
Pro's of IP Insurance
Not all businesses may find IP insurance suitable due to the high perceived risk and cost. However, IP insurance can offer several benefits to safeguard your business assets:
It can protect cash flow by ensuring that legal disputes and litigation do not tie up capital needed for business growth.
It can act as a deterrent by empowering you to take legal action to enforce your rights where your financial position may not otherwise allow it. This can discourage potential infringers and alert competitors that your IP is insured.
It can improve your negotiating position by providing the means to take vital defensive action, avoiding settling on unfavorable terms, and encouraging infringers to negotiate or mediate.
It can increase the value of your IP and allow it to be used as collateral by reassuring lenders, investors, and potential licensees that the value will not be lost due to infringement or invalidity challenges.
Is it expensive?
The amount of premium you’ll pay for IP insurance depends on various factors, such as the level and type of coverage you require, the industry you operate in, and the geographical scope of your protection.
For IP LEI, the criteria include the IP rights you want to insure, the level of cover, and the sector you operate in. The Intellectual Property Enterprise Court (IPEC) provides a cost-effective and less complex alternative to IP litigation, enabling insurers to offer lower premiums for indemnity policies. Premiums vary based on the level of risks, types of cover, and technology sectors, which may require higher levels of coverage or wider geographical coverage.
PLEASE BE AWARE THAT NOT ALL MENTIONED COVER, FEATURES AND BENEFITS ARE PROVIDED AS STANDARD; SOME MAY BE SUBJECT TO ADDITIONAL PREMIUM, OR SUBJECT TO UNDERWRITERS TERMS AND CONDITIONS. IF YOU REQUIRE ANY SPECIFIC COVER, FEATURE OR BENEFIT ON YOUR POLICY, PLEASE ADVISE DURING QUOTING AND ENSURE THAT THE COVER IS INCLUDED PRIOR TO ACCEPTING THE INSURANCE CONTRACT. CONNECT INSURANCE BROKERS LTD ACCEPT NO LIABILITY SHOULD YOU REQUIRE A FEATURE OF COVER DURING THE POLICY DURATION THAT HAS BEEN OMITTED AS A RESULT OF YOUR FAILURE TO SPECIFY IT’S NECESSITY PRIOR TO INCEPTION. PLEASE BE AWARE THAT CONNECT INSURANCE LTD CANNOT GUARANTEE THE SOLVENCY OF ANY INSURER WE USE.