IP Insurance: CIPA's Paper

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Jane Lambert

It will cost you several thousand pounds to get a patent for the UK and considerably more if you require patent protection elsewhere in the world especially outside Europe but unless you can enforce your monopoly in the civil courts you may as well spend the money on a new car or exotic holiday or even down the pub.

The cost of patent litigation has come down considerably in England and Wales (though not in Scotland and Northern Ireland) with the changes to CPR Part 63 in 2010 (see New Patents County Court Rules 31 Oct 2010 NIPC Law) but it is still not cheap. The costs that you may recover from the other side are capped at £50,000 for the trial on liability plus another £25,000 for an account or inquiry but you will probably have to pay at least as much out on your own solicitors and counsel and probably a great deal more. As for litigation in the Patent Court there are no limits though the judges will do their best to keep the parties focused on the issues and avoid unnecessary expense.

So what are your options if you are an inventor or small business owner?

• "Legal aid?" Sorry, chum, that was abolished for business disputes by paragraph 1 (h) of Schedule 2 to the Access to Justice Act 1999 although it may become available for litigation in the Unified Patent Court (see Legal Aid for the UPC 23 Jan 2016), 
• "How about no win, no fee?" No mate!  That may be a perfectly sensible way of funding personal injuries claims against insurance companies but intellectual property litigation isn't like that. For a start liability (whether your patent has been infringed) and the account or inquiry (how much money is due to you) are separate proceedings separated by many months and sometimes years. There's a great deal more uncertainty. Several lawyers have got their fingers burnt (see Success Fees and ATE Premiums in the Patents County Court: Henderson v All Around the World Recordings Ltd. 4 May 2013 NIPC Law).
• Litigation funding? Possibly but unlikely. Most funds shy away from IP litigation for the same reason lawyers steer clear of no win no fee retainers in this area of law.
• Legal indemnity insurance? You will find that most policies specifically exclude IP litigation.

No your best bet is IP insurance. Two of my most popular posts in this blog have been IP Insurance 3 Sept 2005 and IP Insurance Five Years On 23 Oct 2010.

More than five years have elapsed since my 2010 update but I have decided not to update it because the Chartered Institute of Patent Attorneys have just done that job for me.  They have published a 10 page report entitled IP Insurance and other IP litigation funding arrangements which can be downloaded from the CIPA's website. This report discusses before and after-the-event insurance and various alternative funding arrangements and then lists the brokers, insurers and other associations who offer IP cover. 

Anyone wishing to discuss this article, the CIPA report or IP insurance in general should call me during on 020 7404 5252 during office hours or send me a message through my contact form.

Patent Box Roadshow in London

On 4 May 2013 I referred to the patent box roadshow that is trundling round the country (see "Patent Box Roadshows").. The patent box is an important tax concession that which came into force on 1 April 2013 in order to encourage innovation in this country.

On 12 July 2013 the roadshow came to the Liverpool embassy in London and I reported the event in our IP London blog (see "London Patent Box Workshop" 16 July 2013 IP London). There were three speakers, Howard Veares, tax director at BDO, Michael Sandys, head of commercial at Broudie Jackson Canter and me. You can download copies of our slides and handouts from here.

One of the strengths of our chambers is that we are not only strong in IP (see "We can now field a cricket team" 19 July 2013) but also in tax as we share space and facilities with Atlas Tax Chambers. One of the members of that set is Anne Fairpo who is an authority in IP and taxation.  Atlas and the IP Group work closely together.

I have put together the resources of our two groups on the patent box plus some links to some other useful sites in a new blog on the Patent Box. The London event was so successful that we are holding another at the Liverpool embassy on 13 Sep. This time Anne Fairpo will be the star speaker.   Tickets are likely to go like hot cakes so if you want to attend give us a call on 020 7404 5252 or complete our contact form.

Patent Litigation Funding: HLP3 enters the Market

Although it no longer costs anything like as much as it once did to bring a patent infringement claim it is still too much for many individual inventors and small businesses. The small claims track which I discussed in "Soon there will be a Remedy if Someone steals your Idea" on 19 Sept 2012 does not cover litigation relating to patents, registered or registered Community designs, semiconductor topographies or plant varieties.

Ideally a patentee should take out intellectual property insurance before a dispute arises and I have written lots of articles on IP insurance in this blog and elsewhere (see "IP Insurance Five Years On" 23 Oct 2010).  Unfortunately, IP insurance premiums are not cheap and many patent attorneys are sceptical as to the value of the cover.   Consequently many inventors and small businesses cannot afford to fund challenges to their patents.

Some patentees who choose not to take out patent insurance do so in the hope that some law firm or counsel will take their case on a "no win no fee" retainer.   While there are lots of lawyers who will undertake personal injuries litigation on that basis there are very few who will do intellectual property cases without an assured fee for the reasons I explained in "No Win No Fee" (NIPC website on the 14 July 2011).  There will be even fewer such cases after the Legal Aid, Sentencing and Punishment of Offenders Act 2012 takes effect. For very much the same reasons it is hard to get after-the-event insurance ("ATE") for intellectual property cases.   Premiums are high and will be irrecoverable under the new Act.

For some types of litigation, third party funding may offer a solution.   I discussed that option in "Litigation Funding for IP Claims" on 18 Sept 2012.  The latest refinement is HLP3 which was brought to my attention by Peter Rouse.   Peter, who practised IP law for many years, is now working as a consultant with US firm HLP Integration who have brought together funding from Caprica and the legal expertise of Olswang to prosecute patent infringement claims where there is a good prospect of success.   A press release dated 30 Oct 2012 explains how the scheme works:

"In return for an admission fee of £3500 HLP Integration carry out validity, infringement and financial analysis and provide a detailed report. If the results of that report are promising then the report will be sent to Patent Counsel who will carry out an assessment of the prospects of success in patent proceedings. If those prospects meet the required percentage chance of success then the case will pass to ATE insurers for a further risk assessment. If ATE insurance is approved then the patent owner can exercise an option agreement, entered into at the outset, requiring Caprica to fund the proposed litigation. From beginning to end this process is expected to take no more than 3-4 months. In summary: a modest payment per patent; a robust and thorough process of analysis, expert review and risk assessment; and an option agreement exercisable at the patent owner’s discretion for qualifying patents."

Since it is likely to cost at least as much as £3,500 for patent counsel and specialist solicitors to evaluate a claim the admission fee seems almost a bargain.   .

Should any patentee wish to discuss any of these methods of funding he or she may call me on 0161 850 0080 or send me a message through my contact form. Readers can also follow me on Facebook, Linkedin, twitter or Xing..