For many high-growth companies, a lot of the book value is based on intellectual property. These intangible ideas could be exceptionally valuable and underpin future growth and financial success – and they should be covered by intellectual property insurance.

What is intellectual property insurance?

Intellectual property insurance is a specialist form of cover that protects your business from the legal costs associated with either defending or pursuing an allegation of IP-related infringement.

Properly protecting your IP in this way makes it easier to take action against those who steal or copy it.

There are different products of IP insurance, including cover for damages and cover for lost revenue in the event of losing IP rights.

Enforcing and defending your IP

As anyone who has been involved in IP litigation will testify, it can be a long, drawn-out and extremely costly process. With the added threat of injunctions and lost revenue, the damage can be irreparable.

Not only can IP insurance offer protection against legal costs and resultant awards, it can also provide cover for various loss mitigation measures, (such as counter claims and product recalls) as well as providing financial assistance for minimising any reputational injury or protecting the brand.

Should the claim be upheld then the cover can also offer some financial easement in the form of repaid fees and lost future profit.

Clearly all that is great from a defence perspective, but what the insurance can also provide is the financial backing to bring a legal action against a party who has infringed your IP, which let’s face it could be the cornerstone to your entire business model.

Risk management

Needless to say, as with any form of insurance, there is an expectation that due consideration is given to understanding and managing your risk. Depending on the nature of the intellectual property, whether it be a patent, trademark, copyright or registered/unregistered design you need to be confident that you have the legal ownership/entitlement and/or exclusive/territorial rights.

Therefore, as is common to other areas of your business, when it comes to your intellectual property, understanding your peers and your competition is just as important. Obviously, if you are not familiar with what already exists then you are more likely to infringe upon it.

However, from an (insurer’s) underwriting perspective, undertaking the relevant searches and making the appropriate filings is absolutely critical. This can be a time-consuming exercise and interpreting and understanding existing filings can be a complicated process, so if you are unsure, engaging with a patent and trademark attorney or similarly qualified legal counsel should definitely be considered.

The government portal offers some insightful articles, reference points and external links to assist in this area.

Taking the next steps

If your business is working on a new innovation, you should take action now to ensure you are properly protected.

IP disputes happen all the time. One notable case was in 2015 between Nokia and a small UK startup technology firm called Lowdown. In a real David vs Goliath situation, Nokia took the smaller firm to task over its use of the word ‘Here’ on its ‘check in’ location app, stating that it is infringing upon their own ‘Here’ brand name for apps and software relating to mapping and navigation.

Cases like these only serve to show why IP insurance is so important in today’s business environment.

More on protecting IP

Protecting IP in China – Despite China’s questionable record in defending IP, the experience of British business Strix suggests officials are increasingly recognising the importance of protecting company’s rights