Intellectual Property Insurance: What does it cost & how to get it

Do you insure your valuables? Your car, home, business? If so, have you ever thought about insuring something equally as valuable - your intellectual property?

Intellectual property insurance, while not as well-known as other forms of insurance, can be a lifesaver for businesses needing to cover legal costs. A costly process, ensuring you can fund unexpected legal expenses and protect yourself against infringement is essential.

At IP Guardian, our expert patent and trade mark attorneys work closely with individuals and businesses to protect their IP rights. Our services form part of an overall protective strategy of which intellectual property insurance is also a part.

What is IP Insurance?

IP insurance is specifically designed to give businesses financial protection during IP litigation. The costs involved with defending infringement claims and enforcing claims against others can quickly overwhelm an individual or business.

Purchasing intellectual property insurance gives you confidence that no matter what occurs, you will have the means to defend your IP rights without compromising your finances.

What Exactly Am I Insuring?

IP insurance protects your IP assets including copyrights, patents, designs, trade secrets, and trademarks. Protecting the value of these assets is vital to the success of your business. Should your idea be stolen or copied and you have no means to fight this IP theft you stand to lose out in several ways.

IP insurance offers an effective solution to keeping your IP assets safe. From your processes, website domain name, unique invention, product or design, there is an insurer who can offer you cover for IP claims. When it comes to your IP, protect and defend should be your motto - with the help of IP Guardian and an appropriate insurance policy you are well positioned to do both.

What Costs Does It Cover?

IP insurance most often covers:

• Legal expenses related to pursuing claims against infringers of your IP. It also makes provisions for the costs and damages incurred due to loss of profits or reputation and settlements/compensation.
• Legal costs for any IP infringement claim made against you, your customers or licensees. This covers claims of plagiarism, IP theft and copyright violations.

While the specifics may differ between insurers, your IP insurance should cover the addressing of claims made both in Australia and overseas. Your IP rights may be valid internationally as well as in Australia and as such your insurance needs to accommodate claims from any origin.

Do I Need IP Insurance?

In short, no. There is no legislation stating that any business, patent, design, trade mark or copyright holder must obtain an IP insurance policy. However, it is highly recommended.

Without IP insurance in place, your business is at higher risk of experiencing financial distress or bankruptcy due to the costs involved with defending an IP rights claim.

While the added expense of IP insurance alongside other costs incurred running a company may seem unnecessary, ultimately it could save your business or idea from being exploited. IP insurance covers the unexpected and often high costs of dealing with IP infringement.

How It Works – IP Insurance Policies and Infringement Claims

Much like other insurance policies, IP insurance must be current at the time you make a claim and you’ll need to make sure the amount insured offers you adequate coverage. You will be required to provide proof of the claim and related expenditures to gain approval.

If the related expenditures continue beyond the initial claim you will need to make follow-up claims to recover these costs. In certain circumstances where your claim limits are exceeded you will need to be prepared to cover the balance of these charges.

Choosing An IP Insurance Policy

There are numerous IP insurance policy providers with each one offering differing levels of coverage. Some will provide broad coverage with lower claim limits and as such come with a more affordable price. Coverage considerations should be the primary selection criteria as you will find inadequate coverage leaves you with significant out-of-pocket expenses.

It is a good idea to seek the professional advice of a broker regarding IP insurance products. Brokers in professional practice can walk you through the realities of what legal proceedings may cost and ensure that your chosen policy has meaningful limits in place.

IP insurance brokers specialise in helping businesses protect themselves against the theft of patents, trade secrets, trademarks, designs and more. They also provide clients with valuable peace of mind that for any claims against them they will be able to afford professional legal services.

By sourcing the most appropriate cover, brokers protect companies against the high cost of intellectual property IP claims.

What Do Insurers Look At?

With the introduction of IP Protect by global insurance brokerage and risk management firm, Marsh, in 2019, IP insurance costs have become more affordable. This initiative launched by VP Jason Sandler aimed to ensure that IP insurance remains at an affordable price despite the costs related to IP rights violations claims continuing to rise.

Affordable coverage without compromising on the inclusions or claim limits is possible. We recommend working with an insurance broker who will search out the best value policy for your needs.

When determining the cost of your insurance the insurer will review:

• The IP risk profile. This, for example, means an analysis of a company's practices, products and marketing to look for potential risks.
• Whether there have been any previous disputes linked to the IP.
• Whether due diligence was done with regards to ownership of the IP. The creation of patents, design registrations, logos or similar can be used as evidence of due diligence being done. Having proof of IP ownership can help to reduce your premium costs.
• The market in which your IP circulates, i.e. whether it is only within Australia or also exported overseas.

Ultimately, the more risks linked to your IP and the wider the reach of your business the higher the potential costs of your insurance will be.

It is important to note that any risk analysis performed by an insurer is not considered to be a comprehensive check regarding IP ownership. Services for reviewing IP ownership and the lodgement of patents, design or trade mark registration are handled by expert IP attorneys.

Expert Guidance With IP Guardian

From a vice president of a large corporation to your everyday Australian operating a small start-up, protecting your IP is vital. Many businesses have difficulties navigating IP claims, particularly financing legal advice. This is where IP insurance becomes invaluable, the annual costs of a policy well outweigh the financial burden an infringement claim can bring.

Alongside insurance, the best way to protect yourself is to have your IP patent, copyright or design properly registered. At IP Guardian, our skilled attorneys are experts in IP legislation.

We support individuals and business owners with keeping track of their IP, ensuring they are prepared to respond to claims with clear evidence of ownership. Likewise, we facilitate the professional review of IP, checking that you are not inadvertently infringing on another's IP.

Be ready for anything with IP Guardian and IP insurance, avoid costly litigation or have the means to tackle it head-on with absolute confidence. Speak with the team at IP Guardian today on 02 9071 0130 to get started.

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Barry Meskin

Registered Patent and Trade Mark Attorney with significant experience obtaining all forms of registered intellectual property. I hold a Bachelor of Science in Engineering, a Masters of Business Administration and a Masters of Intellectual Property. I’m passionate about showing my clients how they can protect their brands through trademark registrations.