Most insurance policies protect against loss or damage, but Intellectual Property Rights Insurance (IPRI) protects against infringement. "IPRI policies can provide a valid deterrent to potential infringers." says, David Freer, director of HSBC Insurance Broker’s Asset Finance and Political Risks Division. In the interview below, David explains what businesses can do to ensure they are looking after their most important assets.

BPCouncil: What are the issues that may cause companies to consider IPRI policies?

David Freer (DF): Rights owners have to constantly balance the cost of using their IP and protecting their IP. All of the IP property holders that we work with have asked themselves at one point or another… Can I afford to enforce and protect my IP rights against infringement? Can I afford the cost of investigating suspected infringement of my IP rights? And, Can I afford the cost of investigating if someone accuses me of infringing on their IP rights?  

Understanding that businesses may live or die by their ability to protect their Intellectual Property (IP), rights holders actively search solutions that can help them cover potential costs of protecting and enforcing their IP.

BPCouncil: What type of insurance cover is available to help IP owners to protect their IP?

Intellectual Property Rights Insurance (IPRI) indemnification for legal expenses which may arise from the following: ·         The pursuit of any claim or legal proceedings in the civil courts arising from either the infringement or alleged infringement of the policy holder's IPR ·         The defense of any claim or legal proceedings made in civil courts arising from the infringement of IPR ·         The pursuit of any claim or legal proceedings in the civil courts arising from any breach of a written confidentiality agreement or license agreement. Intellectual Property Investigation Costs Insurance covers investigation costs, which may arise in any of the following circumstances: ·         The infringement, or alleged infringement, of the policy holder's IPR ·         An application to amend, cancel revoke or have declared invalid the policy holder's IPR ·         Alleged infringement by the policy holder of another person's IPR ·         An application to amend, cancel, revoke or have declared invalid IPR.

DF: As practiced is in the UK, I will make reference to the main type of IP cover available here. IPRI policies provide coverage of legal expenses for enforcement of the owner's IP should another firm infringe upon it.  The insurance will pay all of the legal expenses incurred in defending the patent up to the insured limit. It is important to note that coverage is paid to the IP owner whether the matter is settled in or out of court.  In the event that the policy holder should lose the dispute, the insurance will cover the legal costs and damages of the other party, to which the policy holder may be liable.  On the flip side, the insurance policy also covers legal costs in the defense stance. Such costs may have been sustained during legal action taken against the policy holder if a product or process of the firm may have infringed upon another party’s IP.

BPCouncil: Protecting and enforcing IP can get expensive, so I imagine that the insurance coverage can as well. Just how expensive is this type of insurance coverage?

DF: In recent years, insurance premiums have been fairly stable in this market, so this has had a positive effect on prices. In general, a premium of £5,000 will provide cover of up to £1m in potential damages. But, premiums can be as little as £300 per annum for companies that are still in the start up phase. It is important that organizations provide for IP protection and enforcement activity at all stages of their development.

BPCouncil: Most brand owners/ IP rights holders work on an international basis. Do IPRI policies cover cross boarder commerce?

DF: Underwriters, based in the UK, will provide cover for all of the countries a brand/IP owner may trade in, including the US.  However, on an average, there are many more legal cases and higher payout awards in the US. As a result cover in that particular market is extremely hard to secure and may be more expensive to attain.

BPCouncil: IP is a dynamic and diverse issue. Can a brand/IP owner cover all of their IP?

DF: Insurers are aware that IP comes in many flavors: trademarks, patents, copyrights, designs, trade secrets, license agreements and so on. IP cover not only offers protection for patents, but also a wide range of IP classifications.

Of course, an IPRI policy is not the only means of IP protection. A brand/IP holder should have a strong team of consultants, which may include patent attorneys, intellectual property lawyers, brand integrity and security experts.

BPCouncil: What are some financial implications to consider?

DF: IP is essentially worthless if you do not have the financial and legal means to defend it in court, should it be challenged.  In fact, IP disputes are more common than you may thank and far more expensive than you may imagine. Just consider,  the most straightforward action can typically cost up to £250,000 in the UK.

However, sometimes just having insurance cover in place can be enough to deter competitors from challenging a business over the rights to its IP.  Having a solid policy in place shows potential infringers that a company is serious about protecting its IP and that they have the funds available to fight a costly challenge. It further illustrates to potential investors and business partners that the policy holders have taken proactive steps to protect important assets… its IP.