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Rising costs of litigation focusses attention on Intellectual property insurance

Intellectual property insurance is becoming increasingly relevant to businesses because of the rising costs of litigation. 

Intellectual property (IP) insurance helps a business defend itself against claims of IP infringement and can help pursue those who are infringing on your patent, copyright or trademark.

An ongoing high profile IP case involves warehouse automation system company AutoStore and UK online grocer Ocado and an argument involving multiple patents over infringement of property rights. AutoStore uses “cube-storage automation” to vertically stack storage bins in grid. Ocado has developed a system where robots move around a vertical grid, which it calls a “Smart Platform.”

 AutoStore sued Ocado in the UK and the US, with additional actions commenced by Ocado in the Mannheim and Munich courts. Of the original six patents at issue in the UK courts, three remain the subject of infringement disputes.

Taking out IP insurance has numerous potential benefits as it can protect cash-flow, provide a deterrent, improve a negotiating position and potentially allow your IP to be used as collateral and can add value.

Intellectual property insurance protects inventors and companies if they're sued for infringement by another company. The most common type pays for legal fees and monetary damages if you're found guilty of intellectual property infringement. Pursuit policy insurance is another form that helps pay expenses if you sue someone for intellectual property infringement.

Intellectual property is divided into two categories:

  • Industrial Property:This includes patents, trademarks, and industrial design.
  • Copyright:This covers artistic works. Examples include books, films, music, paintings, photos, and sculpture.

The majority of IP insurance is currently focussed on businesses who have already secured IP rights, however, individuals can also protect themselves against inadvertently infringing the rights of others.

Insurance products can cover one or more rights and a variety of IP risks including:

  • opinion only: covers legal costs of you obtaining an opinion on the likelihood of successfully enforcing or defending an IP claim
  • enforcement and defence: covers legal costs of you taking action to stop others infringing IP rights and defending allegations of infringement. Can cover enforcement and defence either separately or together
  • damages: covers any damages payable if you lost an infringement action
  • validity: covers legal costs of defending challenges to validity of your rights

Other products include:

  • lost revenue: covers revenue lost as a result of you losing IP rights
  • indemnity: covers liabilities arising under guarantees you give to third parties
  • cyber: covers losses from a variety of cyber incidents, including IPR breaches

Another area where IP is becoming increasingly relevant involves university research programmes which have the capacity to grow into valuable business opportunities. Where research performed in a university setting is commercialised the resulting business is known as a 'university spin-out'.

The success of these ventures revolves around the intellectual property rights ('IPRs')  from the research. Central to the spin-out process is establishing who owns the IPRs – whether it is the spin-out founder or the university. This will dictate who is able to protect and exploit the outputs of the research.

It is important to ensure that the IPRs are capable of being protected against third party infringement and that the spin-out company has the ability to assert its ownership/ usage rights in the event a third party attempts to infringe the IPRs.

If you would like to discuss IP insurance, or obtain a competitive quotation, please contact Daniel Moss at  or on 0044 (0)113 2439812

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