IP Insurance: All you need to know

Published: 12/06/2018

Are you in innovating? Working with images, brands, copy?  Selling an IP-rich business?

Digital, tech and media businesses are wide open to allegations of plagiarism and patent/copyright breach on a global basis.

What if…
…Someone else had your idea first?
…You look a lot like another company?
…You use an unlicensed image?
…You use unlicensed music?
…Your content/design is too similar to someone else’s?

Do you have protection in place to fight that battle? The legal costs could be crippling – are you sure you have the right Intellectual Property (IP) Insurance? The average UK IP suit can cost anywhere between £1M and £6M – ouch!

If you’re not 100% sure you have the right IP Insurance in place, do get in touch – our advice is always free and without obligation.

In tech and creative sectors, intellectual property is the holy grail – everybody’s after the big new idea or the fresh new look. You may think your idea is completely original – but can you afford to prove it?

You could be sued from anywhere in the world; IP insurance is designed to cover the legal costs of defending yourself.

What kind of IP Insurance do you need?

1. Defence

This covers legal fees and expenses for defending yourself in court if you inadvertently infringe someone else’s IP (eg: plagiarism, passing off). A good IP solicitor may cost upwards of £500 per hour, and developments in communications technology such as the Internet mean that your infringement may be more easily identified. This cover is often included in a standard Professional Indemnity policy.

Example: you discover you’ve come up with the same sales slogan as Unilever, who have already registered; or that your new ad has already been written in the US.

2. Pursuit

This covers your legal expenses for pursuing people who infringe your own IP. It’s a “fighting fund”, and is a separate purchase to be added to your insurance portfolio.

Example: someone imitates your domain name and deflects your internet traffic to themselves.

3. Agreements

This covers the costs of pursuing or defending a case in which an existing IP exploitation agreement starts to go wrong.

Example: your distributor or licensee breaches the contract.

4. M&A Transactions
Don’t let Intellectual Property disputes jeopardise the deal

Picture this.  You’ve worked hard. You and your partners have taken risks. Naturally, you’ve had to leap a few hurdles and dodge a few bullets over the years – but it looks like it’s all about to pay off. They love your tech. They like your team and they’re ready to sign. The Champagne is on ice.

But their lawyers are insisting on bullet-poof IP representations, with cast iron warranties of non-infringement and title. They want cash held in escrow, just in case there's a problem.

With Transactional IP Insurance, you can ring fence your IP liabilities and transfer the IP risk to your insurer before your deal comes unstuck.  It provides security and peace of mind in the sale or purchase of intangible assets, covering the Representations and Warranties around the validity or non-infringement undertakings applying to IP Rights (Patent, Design, Copyright and Trade Mark):

  • Fund-raising deals
  • Licensing transactions
  • Sale or purchase of a single asset
  • Sale or purchase of a portfolio of assets
  • Corporate sale or mergers

Transactional IP Insurance can cover...

  • Defence costs and damages for IP infringement actions (including patent)
  • Aggregate policy limits of up to £50m/$50m
  • Worldwide cover available

...with options to extend cover for Open Source infringements & Trade Secrets

If your involvement with IP is largely Internet-based, you can also buy protection in a Cyber-liability package. As well as data corruption/loss etc., this covers all your IP exposures online, including damage to your website, and infringement by you/employees of intellectual property or copyright material from the Internet.

Our advice is:

  • Make sure your property is covered – in the event of under-insurance, you simply won’t get a full claim settlement
  • Get a good Professional Indemnity policy to cover your various liabilities as a functioning business
  • Essential for Internet-based organisations: buy IP cover as part of a Cyber Liability package
  • Optional: if you are heavily reliant on your brand or on generating income from licensing, get a full IP policy.

Current Fair Use image copyright laws state that you’re financially liable for posting copyrighted images, even if:

  • You did it by accident
  • You immediately take down the picture after receiving a takedown notice
  • The picture is resized
  • If the picture is licensed to your web developer
  • You link back to the photo source and cite the photographer’s name
  • Your site isn’t commercial and you make no money from your blog
  • You have a disclaimer on the site
  • The picture is embedded instead of saved on your server
  • You found it on the Internet

Talk to us about your Intellectual Property Insurance needs. Email Hanna Beaumont or call 01223 200654.

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