Intellectual Property Rights Insurance: Everything You Need to Know
Intellectual property rights insurance is insurance coverage for companies that need to protect their intellectual property (IP), but may not have the means to handle a full-blown IP lawsuit. 3 min read
2. Intellectual Property Insurance Coverage
3. Why Is Intellectual Property Insurance Important?
4. What Is Intellectual Property Rights Insurance?
Intellectual property rights insurance is insurance coverage for companies that need to protect their intellectual property (IP), but may not have the means to handle a full-blown IP lawsuit.
Do You Have Intellectual Property Coverage?
Litigation surrounding intellectual property continues to get more expensive every year and is already at a high rate. Some companies will face financial threats if they have to go to court over IP. Without intellectual property coverage, a company could end up dissolving due to the expenses of an IP case, especially in the technology market.
If you own a company in today's business market, the likelihood you'll run into IP litigation is quite high. Being well-prepared for IP legal issues could mean the difference between surviving a lawsuit and filing for bankruptcy. The modern marketplace has become more and more competitive over the years and the competition has even spread into the courtroom.
It is more important than ever to protect your business from litigation costs and IP theft.
Intellectual Property Insurance Coverage
Commercial General Liability (CGL) insurance is a standard policy that covers some of the big potential issues like personal injury and property damage. CGL policies do not cover lawsuits regarding intellectual property, so many companies purchase insurance coverage specifically designed for such matters.
There are two types of intellectual property rights insurance coverage:
- Enforcement or pursuit
Defense coverage will help protect and support a company if they are sued for IP rights infringement. The enforcement or pursuit coverage types assist companies that want to sue competitors for stealing their IP. Frequently, such cases end in a settlement or fine and this insurance will help the business afford such costs.
If a company has many trade secrets, copyrights, patents, or other valuable IP to protect, they might decide to take out an enforcement policy type in case any of their valuable IP is used by another. Smaller companies trying to compete with larger, more well-off companies can benefit from these policies. If a smaller company tries to pursue a larger one for IP infringement, they will likely not be able to handle the costs.
Some large companies will pick on smaller companies, infringing on their IP rights because they know the smaller company can't afford a lawsuit. Smaller companies with fewer assets may rely on their valuable IP for their success, so it will be crucial for them to protect it.
Why Is Intellectual Property Insurance Important?
As companies assess the risks of their intellectual property, considering the cost of litigation is a large part of the risk management assessment. Intellectual property rights insurance is seen as a way to manage and lower such risks.
A business will first need to decide on their bigger goals and philosophy for risk management. They will need to answer the questions:
- How much are they willing to risk?
- What IP do they consider to be worth the risk of litigation?
Because there are no IP rights insurance policies that cover all aspects of IP infringement litigation, Business owners need to decide where their biggest risks lie, and where they need coverage most.
Some IP rights insurance policies exclude some important aspects of IP rights litigation. Policyholders will need to keep an eye out for some of these commonly excluded items:
- Fines and penalties (punitive, treble, exemplary)
- IP infringement that the policyholder was aware of before taking out the insurance policy
- Expenses and losses that are the consequence of willful IP infringement
What Is Intellectual Property Rights Insurance?
Some forms of IP protection can be costly, like patents and trademarks, but legally enforcing your company's IP rights or defending yourself if you are accused of infringement can easily become much more expensive. This is where IP rights insurance comes in.
IP rights insurance policies help make defending your IP affordable. You make have a trademark for your company's title, but if a competitor tries to use that protected title for themselves, will you be able to enforce your protection? Many companies cannot afford litigation, so they take out an IP rights insurance policy along with their IP protection to be totally sure that their products, inventions, ideas, and all of their original creations remain theirs.
If you need help with intellectual property rights insurance, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.