Have a Great Idea? Insure It.

 By Catherine Powell

Image courtesy Pixabay

If you haven’t noticed, the economy is booming.  While the post-pandemic recovery has put many businesses that were hanging on by a thread back in the black, what’s really been the driving factor behind the upturn has been innovation.  It appears that while the country was in lockdown, the homebound workforce wasn’t just punching the clock in their jammies. Many were exploring other avenues of gainful employment.  Sometimes this meant developing revolutionary products that are now ready to market.  If you’ve got an idea for a better mousetrap and you don’t want someone to steal your cheese, then you may wish to look into what’s called Intellectual Property Insurance.  

What is intellectual property? – In general terms, intellectual property is defined as a product of the mind that’s protected from unauthorized use by others.  As such there are four types of intellectual property that are recognized in this country, including copyrights, trademarks, trade secrets, and patents.  Once an individual has established ownership of intellectual property, he or she has what amounts to a monopoly over that particular concept.  This is essential if the inventor hopes to capitalize on a product, process, or idea in the marketplace.  Without protection, competitors would be free to use and/or sell similar concepts or products for commercial gain.

What happens if a person or identity infringes on your intellectual property? – Having a virtual monopoly on a concept or idea and protecting one are two different things.  If a copyright, trademark, trade secret, or patent is breached, the only way to seek redress is often through the courts.  This can prove to be a protracted and expensive process, particularly if the cost of legal fees is coming out of the inventor’s pocket.  That’s why intellectual property insurance was created to help inventors defend their rights.  

IP insurance needs to be tuned to fit the inventor’s needs. – Just as there are four kinds of IP protection offered by law, there are four ways in which IP coverage can be provided: offensive, defensive, contingent, or a combination of all three.  Offensive coverage helps an inventor enforce their IP rights. Defensive coverage indemnifies a company or individual against suits from other parties.  Contingent coverage protects against catastrophic monetary losses in any ongoing IP cases.  Since IP rights can affect everything from profits to financing, securing protection to defend a product or idea in court may mean the difference between success or failure in the marketplace. 

What does IP coverage include? – Will the policyholder of defensive IP insurance be able to count on having the cost of defending a claim in court be paid by the insurer?  It all depends on how the IP policy was constructed. Likewise, if the holder of an offensive IP policy wishes to be able to recover costs associated with an entity that has infringed on their rights this needs to be stipulated in writing.  It’s vital that a policyholder understand all the variables involved in pursuing or defending themselves in either an offensive or defensive lawsuit that can involve much more than simple legal expenses.  Fine-tuning IP coverage to meet your needs could prove vital to the survival of your business.  Below are some of the variables you need to consider before purchasing IP insurance?

1. What’s excluded on an IP policy? – Does a policy include or exclude coverage for such things as cross-claims or counterclaims that could crop up during litigation?  

2. Are subsidiary expenses such as storage, transportation, labor, and public relations included or excluded? - Since a judge can force a defendant to remove their products from store shelves while a case is pending, the cost of compliance could be substantial.  

3. What happens if you lose your lawsuit? - How high are the damage limits on your policy? Does your policy include or exclude legal fees should they be awarded to a claimant or plaintiff?  

4. Is bodily injury coverage included or excluded? – Should someone be injured or killed by your product or process, are you covered?  Since personal injury lawsuits involve some of the highest jury awards in the nation, you may wish to make sure you and your company are adequately protected if lawsuits are ever filed against you.

5. Does your coverage extend to you alone, or does it apply to your agents, licensees, and distributors who handle your products or processes?  Additionally, are you protected should your agents, licensees, or distributors breach your contract or try to sue you?

6. Does the policy include or exclude coverage for any alleged bad conduct on your part? – Any such exclusion could leave you and your company toothless should an agent, licensee, or distributor sue you for breach of contract or an individual sue you for product liability.

Just as not all intellectual property is the same, no two IP insurance policies are written the same.  To make sure you're adequately protected,  you should speak to your partners, legal counsel, and other experts before obtaining coverage for the concept you’ve labored long and hard to create.

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/