Intellectual Property Insurance
Intellectual Property (IP) 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.
Modern organizations in all industry sectors — including tech-enabled organizations and companies considering an IPO — should consider their exposure to risks relating to patents, trademarks, copyrights, and trade secrets, including protection from:
- Defense costs and damages resulting from IP infringement or misappropriation claims brought by third parties.
- Defense costs and damages resulting from contractual obligations to indemnify vendors, partners, upstream manufacturers, or downstream customers in the event of third-party infringement claims.
- The costs of defending against third-party attempts to cancel or invalidate registered IP.
Types of IP Insurance
Generally, there are five types of IP insurance products:
- Defensive IP insurance policies can protect an insured’s IP, products, and services from external attack and can backstop an insured’s outbound indemnity obligations.
- 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. For example, a company that has won an inbound IP infringement suit at trial might want to purchase a contingency policy to mitigate the risk of a loss on appeal.
- 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.
- Collateral protection insurance can backstop the value of an IP asset when that asset is pledged as collateral to obtain a loan.
- Trade secret value insurance can protect an insured from loss due to the misappropriation (theft) or unauthorized disclosure of its own trade secrets.
IP Protect: An Insurance Solution for Intellectual Property Risks
To address an organizations’ intellectual property (IP) risks, Marsh developed IP Protect. IP Protect is backed by Ambridge Partners, a leading managing general underwriter of transactional, complex management liability, and intellectual property insurance products. IP Protect goes beyond current insurance offerings to provide broad defense coverage for losses relating to patents, copyrights, trademarks, and, by endorsement, trade secrets. More than $60 million in primary coverage is available from Ambridge, with additional capacity available from excess liability insurers.
“As the importance of IP rights and their related expenditures continue to rise, many organizations have sought an effective solution to protect their IP assets, products, and services, only to find inadequate coverage at a high cost,” said Jason Sandler, a Vice President in Marsh’s US Financial and Professional Practice. “With IP Protect, we now are able to provide clients with the broad coverage and meaningful limits they have been seeking — at a more affordable price.”