Intellectual Property Insurance

Before the Event Intellectual Property Insurance  

Your IP is likely to be the most valuable asset in your business and BTE IP insurance is the most cost effective way to mitigate significant risks to its value.  

A number of our clients are early stage pharma companies looking to mitigate risk around their IP. Specifically the cost risk of being sued for infringing a third party’s rights or a third party infringing their rights.  They are also looking to mitigate exposures under IP warranties and indemnities given to third parties.  

Having BTE cover in place facilitates such licence agreements and also gives comfort to investors, lendors and licensees that, if a business critical event occurs, insurers will fund the litigation not them.  

Below are some examples of the types of cover available. Premiums tend to range from around 0.5% to 1% of the amount of cover being sought per annum and is dependent on the development stage,  therapeutic area and whether US cover is required.  

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Enforcement Cover

If a third party infringes Intellectual Property rights (patent, trade mark, copyright, trade secrets etc), enforcement cover will fund the legal costs of pursuing the alleged infringer.

Claims example:-

A start-up medical device company was exhibiting at a trade show in Europe and discovered a competing device that appeared to infringe its patent. Information was gathered and, following the show, a cease and desist letter was sent to the allegedly infringing party confirming the company’s intention to issue proceedings. The competitor agreed to negotiate a license, the terms of which firstly required a compensatory payment of £50,000 to reflect the extent of the infringement to date and also required ongoing royalty payments on all future sales of the infringing device.

Without the insurance policy providing funds to enforce their rights, the insured could have possibly gone out of business or lost a high percentage of their market share.

Defence cover

If a company is accused of infringing a third party’s Intellectual Property (patent, trade mark, copyright), defence cover will fund the cost of defending the action and meet any damages that flow from the infringement.

Claims example:-

A software developer was accused by a large corporate, who holds a significant patent portfolio, of infringing one of its patents. On the advice that it had a good defence to the claim the software developer informed the patentee that it was insured and would defend the claim. After a lengthy negotiation, the majority of which was funded by the insurer, the matter was settled between the parties without proceedings being issued.

Contractual cover

It is common in IP licensing agreements for the licensor to give IP warranties and indemnities. Contractual insurance covers exposures arising under indemnities given in IP related agreements.

Claims example:-

A £1m revenue financial software developer created software which linked investors to fund managers. One of their biggest clients was contacted by a third-party competitor alleging that the software they were using infringed a patent owned by the competitor. The client alerted the software developer as, under their licenc,e the client was indemnified against IP infringement allegations.

The costs of the claim were met by the insurer and the relationship between the insured and its client was maintained.

Intellectual Property Insurance

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