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Intellectual Property

Intellectual property (IP) has become most companies’ most significant asset, yet adequately managing risks related to intangible assets, including intellectual property, can be a challenge.

Intellectual property remains an increasingly essential component of corporate value and a critical engine for industrial and economic growth. It is imperative for companies to protect their most vital assets — which are increasingly intangible in nature. However, traditional intellectual property insurance solutions have often fallen short of companies’ needs, leaving them exposed to litigation and other potential threats.

A recent spate of initial public offerings (IPOs), high-profile mergers and acquisitions, and litigation has thrust IP into an increasingly critical position in global economics. However, even when that IP accounts for a high percentage of the company’s value, many organizations often fail to understand the risks they face related to IP and other related intangible assets.

With limited resources and bottom line pressures from stakeholders, companies need to consider all elements of strong IP management practices, including risk management. Not taking appropriate action can pose a serious threat to an organization’s success.

While IP risk can at times seem opaque and ambiguous, Marsh’s team of specialists can help identify and clarify the risks you face and support your development of risk management strategies that address several programmatic fundamentals. Marsh is one of the only brokers with in-house IP expertise, a proprietary solution, and proprietary relationships with multiple specialty underwriters working in the IP space.


Intellectual property, also known as IP, is a general term for the set of intangible assets owned and legally protected by a company from outside use or implementation without consent. Stemming from its ability to provide a firm with competitive advantages, defining IP as an asset aims to provide it the same protective rights as physical property. Obtaining such protective rights is critical as it prevents replication by potential competitors — a serious threat in a web-based environment or the mobile technology sector, for example.

If you own IP, you can realize value from it in several ways. You can use it internally for your own processes or as a means of providing goods and services to your customers. You also can share it externally through legal mechanisms such as royalty rights.

In the United States, IP as an asset category can be divided into four distinct types:

  • Copyrights: A form of protection granted to the authors of original works of authorship, both published and unpublished. A copyright protects a tangible form of expression, rather than the idea or subject matter itself.
  • Trademarks: Any word, name, symbol, or device, or any combination thereof, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others.
  • Patents: The grant of a property right to the inventor, providing the owner the right to exclude others from making, using, offering for sale, selling, or importing the invention. Patentable items may include objects or processes such as new technology or business methods, but excludes more abstract items such as websites or ideas.
  • Trade secrets: A proprietary or business-related information that a company or individual uses or to which they possess exclusive rights. The information must meet several requirements: that it is genuine and not obvious, provides the owner with competitive or economic advantage and thus has value, and is reasonably protected against disclosure. 

There are five types of intellectual property insurance.

  • Defensive IP insurance: Protects an insured’s IP, products, and services from external attack and can backstop an insured’s outbound indemnity obligations.
  • Offensive IP insurance: Covers the costs of IP enforcement matters such as an insured filing suit against a third party asserting that the third party has infringed the insured’s IP.
  • Specific contingency insurance: Covers known risks and is appropriate for businesses seeking litigation buyout insurance or catastrophic loss protection for a known ongoing matter, including IP litigation.
  • Trade secret value insurance: Helps protect an insured from loss due to the misappropriation (theft) or unauthorized disclosure of its trade secrets.
  • IP-insured financing: Helps secure the value of an IP asset when that asset is pledged as collateral to obtain a loan.

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Paul Murray

Paul Murray

Senior Client Advisor, FINPRO