Intellectual Property Insurance

Two reasons:

1. You build things, write code, create a product or offer a service that could be infringing on existing intellectual property rights

2. You have your own IP that you need to protect

Companies concerned about being accused of IP infringement worry about the thousands of suits filed each year in response to perceived IP infringement. Between real innovators and patent trolls, there are too many unknowns that have the power to disrupt your business.

A judgment against you in one of these cases could lead to you paying your competitor for their lost profit, signing unfavorable licensing agreements or forfeiting your rights to sell the product altogether. There will be PR and investor relations costs that are difficult to predict.

And we haven’t even begun to talk about legal fees, administrative costs and the years it could take to settle the case. Even if the complaint is borderline frivolous, you’ll still have to pay a lawyer to respond and defend you.

For innovative companies that actually hold patents for things they’ve created, protecting this property is the primary concern. Insurance can help here too. The costs of enforcing intellectual property rights in court can be burdensome and carriers are willing to take this process over for their policyholders.

Patent lawsuits can cost between $950,000 and $3,100,000 depending on how far the trial goes and the revenue at stake.

It should come as no surprise, then, that intellectual property insurance (or patent insurance) has stepped in to address this risk for businesses both big and small.

Defense Coverage

Enforcement Coverage

Intellectual property insurance provides capital for legal expenses if you find yourself involved in covered IP litigation.

In the case of defense policies, it helps pay for any judgment or settlement rendered against you. Enforcement policies let you work with the carrier to actually enforce your own patents. With the underwriters’ permission, you could sue the infringer and then be reimbursed for your legal costs.

Many carriers take a proactive approach and help their insureds as much as possible. These carriers will (for a fee) conduct a full analysis of your IP risk relative to your industry and provide you a report prior to issuing their insurance quote. This serves the dual purpose of letting the underwriter assess their potential exposure while also educating policyholders to make sure they know how to operate safely in their space.

IP litigation is one of the most common claims out there and is far more likely to occur than even D&O claims. Between “patent trolls“, who amass huge libraries of IP and true innovators who want to protect their businesses, there’s no shortage of conflict. Patent courts have found relief in the past few years with numbers of filed actions declining, but it’s still important to remain vigilant: we’re still in the middle of an explosion of patent litigation compared to past decades.

The data suggests businesses need to have a healthy respect for this risk and do whatever they can to manage it. Intellectual property insurance gives you access to IP experts who know the space inside-and-out, it gives you the peace of mind of a financial safety net and it puts a massive financial institution in your corner that has a lot of weight to throw around if you’re targeted by either an infringer or an IP holder.

Patent insurance is a type of intellectual property insurance coverage. An IP insurance policy can include coverage for patents, copyrights and other specific types of IP. The phrases “Intellectual Property insurance” and “Patent insurance” are sometimes used interchangeably, but not all IP insurance policies include coverage for patents.