When asking a business owner what their most valuable asset is, the response we hear most often is, “our people.” Many times, upon further reflection, it’s the creativity and ideas those people bring to the organization that owners value. As a business owner, protecting that intellectual property is high priority because it sets your company apart from the competition.
Often times, intellectual property is the most valuable asset a company owns. Through patent, trademark or copyright law, these concepts can be “protected” for a specific and definite period of time. However, without actively protecting these rights through legal action, this protection has little value.
There are two specific types of risks and associated insurance products related to intellectual property that should be considered:
The first risk involves another company or individual infringing on your patent or intellectual property (IP). In other words, that person or company is using your IP as their own, for their own profit. They are in effect stealing your thoughts and concepts for their benefit. As the owner of that intellectual property, if you don’t defend against this type of attack, your protection is useless. Abatement Insurance is the type of coverage which provides for reimbursement for legal fees associated with defending your own IP.
The second type of risk associated with IP is when another company or individual claims that you are infringing on their intellectual property. In this case, you or your company is on the defense related to IP. This type of coverage provides for legal fees to defend your actions and is called Defense Insurance. Defense coverage may include costs associated with a settlement as well.
Intellectual Property disputes are on the rise and they are costly. Local IP attorney, Kurt Rylander of Rylander & Associates confirms that the latest Survey by the American Intellectual Property Law Association (AIPLA) reveals the average cost just to bring and defend an IP lawsuit are astronomical. For a case that has damages under $1 million in issue, the cost to bring or defend the suit is $767,000 for patents, $327,000 for trademarks and $310,000 for copyrights. For cases that have between $1 million and $25 million in issue, the cost of the suit alone is $2.6 million for patents, $790,000 for trademarks and $750,000 for copyrights. This is just to bring or defend the suit, and does not take into account the damages, judgment or award.
Is this a risk that you have identified in your business? Take time to consult with an insurance professional to help determine the insurance solutions that can best address your needs. Once effectively identified, as a business owner, you can understand your options and make an informed decision around how to manage this risk.
Tony Johnson is an accredited advisor in insurance and can be reached at Davidson Insurance, 360-514-9550 or Tony@Davidsoninsurance.com.