When we’re talking about IP, we’re not talking about your computer’s IP address. IP stands for Intellectual Property. Today, protecting your IP has never been more important. As the need to differentiate your business from other businesses becomes more prevalent, protecting your intellectual property has become a point of focus for most business owners.
So, how do I insure my intellectual property? Let’s dive in.
what is intellectual property?
Intellectual property is any form of creative ideas and assets like a product design, symbol, or manuscript unique to your business. Think of it as a trade secret. It can be an idea with tangible factors you use within your business model.
Investopedia explains IP as “an umbrella term for a set of intangible assets that are not physical in nature.”
For example, if you’re a marketing company and you have a specific model for onboarding clients that’s repeatable and builds your business– this model is your company’s IP. Your process helps clients fine-tune who their brand is, what their brand voice is, and what their client market is. The idea has tangible deliverables.
Unless the IP is trademarked, legal patents or protection will expire on IP. The rights to IP are divided into different areas including copyrights, related to copyrights, and industrial property.
Copyrights cover the arts, like literature pieces and musical compositions for at least 50 years whereas industrial property protects patents, trademarks, and industrial design.
Insuring your IP helps keep others, like competitors or even employees, from stealing your brilliant ideas and processes.
Different types of IP include:
- Trade secrets
what is intellectual property insurance?
IP insurance is specific insurance for companies looking to cover any legal costs that may arise if another entity tries to steal your IP.
The two types of IP insurance are:
- Infringement defense
- Abatement enforcement coverage
Infringement defense is the most used IP insurance coverage. This insurance covers policyholders who have infringement claims against them because they used the asset without authorization.
On the other hand, abatement coverage protects the IP owner when they pursue an infringement claim against another entity because the other entity used the asset without authorization.
why do i need intellectual property insurance?
Insuring your IP protects what is arguably your company’s most valuable asset. In the end, it helps defend against lawsuits, protect your market share, and discourage lawsuits against you.
intellectual property litigation costs
The costs of litigation can cause a business to go bankrupt. Having the right insurance that covers your business in the case of a lawsuit, or in case you need to pursue a suit against someone using your IP.
To put costs into perspective, large infringement cases like Stac Electronics v. Microsoft and Fonar v. General Electric cost over $120 million. These are large corporate litigations, but the average cost of an IP litigation case can range from $50,000 to $3 million. Depending on your company, the costs may not mean you will go out of business, but it can cause a significant financial burden.
The costs add up in the form of:
- Attorney fees
- Punitive enhancement
- Lost profits
- Interest assessments
At the end of the day, purchasing IP insurance is cheaper than undergoing or pursuing a lawsuit.
how to protect your property
IP can be difficult to prove and insure because it is an idea, however, this idea can be an invaluable addition to the company. Guarding your IP gives your business a competitive advantage in your field. So, how do you protect IP?
Various ways include
- Trademarking it
Speaking with a well-versed IP attorney can help your business clearly define your IP and find how to legally structure it as such. Once your IP is clearly defined, obtaining IP insurance can help you stand up against any potential infringement on your processes.
Do you know if you have the proper coverage to meet your business’ needs? Take a look at one of our articles discussing if your insurance coverage matches your business size here.