In chambers' other blog, I discussed today whether IP insurance can work. I passed on an anecdote which suggests that it can. As I say in my article, not everyone would agree with me. Insurers, like everyone else in business, expect to make money. That means that they will not take on every type of risk and that cover is not unlimited. But it is a great deal better than nothing.
Before doing anything else I would urge inventors to do some homework on the IP insurance market. There have been some useful recent reports published by the European Commission and IP Wales. The EC report was prepared by CJA Consultants Ltd. and is entitled Patent Litigation Insurance. The IP Wales reports are "intellectual Property & Legal Expense Insurance" by Prof Beynon and others and the preliminary report downloadable from the same site. If you really don't have time for anything else, at least read Mandy Haberman's short article "Insure or Unsure?" (Mandy speaks from experience) and the DTI's "Insurance to protect IP Rights".
Types of Insurance
There are two types of insurance policies available to patentees and other IPR owners:
- IP or "Before-the-Event" Insurance Cover
- "After-the-Event" or Legal Expenses Cover
I shall discuss the latter first because there is less to say about it.
After the event cover is not specifically related to intellectual property enforcement. It is a policy against the other side's, or your own and the other side's, costs of litigation. Insurers only take on the risk if they are pretty sure you are going to win. A typical premium is one third of the estimated costs. As these are unlikely to be less than £150,000 in a Patents County Court case the insurer will look to the insured for £50,000. Insurers may accept payment for such cover by installments but it is a hell of a lot of money for an SME to stump up at a time of maximum vulnerability.
This is very much cheaper and easier to obtain particularly if it is sought at the time of the patent application. Premiums can start as low as £500 for £150,000 cover for a start up company against the other side's costs. More typically, the premium will be £4,000 plus but that will include own costs, as well as other side's costs, cover to hudreds of thousands and perhaps one or two million pounds. Insurers will negotiate exclusions, reduced premiums for accepexcesscesss and so on. Before the event cover is the sort of cover that is most likely to deter infringement.
In mentioning the following websites I must make clear beyond peradventure that I am not recommending any of the companies that are mentioned or referred to. This is a small and esoteric area of insurance and it is essential that an IPR owner takes specialist advice. I would also advise a lot of shopping around for the best deal.
One of the informativetiive website on the subject is probably Intellectual Property Insurance Services. This is run by an agent of Templeton Insurance Ltd in the Isle of Man. In fairness, I should point out that Templeton has another agent in Kent or South-East London but I don't know a lot about them. IP Insurance Services' website gives details of its start-up, standard and after-the-event policies. Their prime mover is an entertaining Scotsman of Singapore origin called Ian Macleod. He often accepts invites to address inventors' group, Business Link and other meetings. While repeating that I amendorsingrsing Mr Macleod's or any oinsurancerance company, it is worth listening to what he has to say if he is in your area.
Another good source of information is Mandy Haberman's "Make Sparks Fly" site. I have already mentioned her article "Insure or Unsure?" The reason Mandy speaks from experience is that she was able to see off a number of predators for her feeding cup because she had been wise enough to take out cover. Mandy has found three insurance companies to sponsor her site though when I checked them out while researching for the "Insurance" chapter of a book I am writing on IPR enforcement Hiscox told me that they no longer write before-the-event policies and Richmond House Group is yet to return my call. Miller Insurance Services Ltd does offer bother intellectual property asset protection and Intellectual property litigation cover. Its director, Ian Lewis, has written a very interesting paper "Coming of Age of Intellectual Property Insurance" which I commend.
Finally, I should say that IP Wales has arranged a special scheme for its members with HSBC Insurance the particulars of which can be obtained through its website.
More to come
Insurance is an important topic as it seems to me to be the only way many companies can afford to protect their intellectual assets. I shall be posting a lot of articles on this and other sites over time. Bookmark this one because I shall always link back to this article.
5 Feb 2006 "IP Insurance: Two more Insurers Identified"