Intellectual Property Insurance

Name: BMS Group
Price range: $

Intellectual Property Insurance provides cover for financial losses suffered in connection with infringement lawsuits and IP invalidation proceedings. It also addresses indemnification claims related to a company’s IP or its products or services under contracts with several parties (including licensees, licensors, customers and manufacturers).

Intangible assets i.e. goodwill, brand recognition and intellectual property, such as patents, trademarks, design rights and copyrights, comprise a significant element of the valuation of many businesses and can therefore be a key area of risk in an acquisition.

As competition increases in the market place, it becomes vitally important to protect such assets from threats and challenges such as defending themselves against accusations of intellectual property infringement and associated litigation.

As a result of this, businesses are exposed to potentially significant financial losses and reputational damage. Intellectual Property Insurance looks to address these issues which can be catastrophic for investors if they remain unaddressed.

Scope of Cover

The policy covers either:

i) third party claims suggesting that an insured’s owned or licensed products or services infringe upon a claimant’s IP;

ii) claims challenging the validity of an insured’s IP assets, including in the context of:

Infringement lawsuits or invalidity proceedings brought against an insured;
Contractual indemnification claims by customers, manufacturers, or licensees; and
Both judicial and administrative (including EU Intellectual Property office and European Patent office) proceedings.

Coverage is provided for

Both the cost of defending a claim and damages for which an insured becomes liable
Specific jurisdictions or worldwide
The insured's ability to choose defence counsel

Policy terms

Limits are available up to USD50m
On average premium rates vary between 1% and 5% of the limit purchased
Policy can be issued annually or for multiple years

Coverage is flexible and is tailored to cover the entirety of a company’s IP portfolio, products, or services or can focus on specific IP assets, products, or services. It can also respond to liabilities in respect of licensing agreements.

Process

The insurer will need to understand and receive an overview of the business and the IP that they own. Thereafter it is a case of understanding the issue or the risk that the company is facing, i.e. is it an infringement issue or a validation issue with any supporting documentation and the key factors. This is normally sufficient to provide non-binding terms from the market. If these are of interest then an insurer is engaged and the policy is then underwritten and negotiated.

Intellectual Property Insurance can support clients across most industries. Some insurers will have broader appetites than others and therefore it is important to engage with us early on to determine optimal coverage.