The following piece is not exhaustive and should be read as an overview. For more information, consult legal counsel.
It’s your idea…it originated in your brain. So it’s your asset and you’re protected, no matter what, right? Maybe yes, maybe no. A lot depends on the type of commercial insurance protection you carry. When it comes to understanding intellectual property (IP) the waters can get really muddy. The IP market is still fairly young, and growing at a rapid pace with no signs of slowing down. And with that growth comes risk. Let’s try to clear it up a bit.
First, what is intellectual property? According to the small business encyclopedia at Entrepreneur.com, IP is defined as “The ownership of ideas. Unlike tangible assets to your business such as computers or your office, intellectual property is a collection of ideas and concepts.” Bottom line is that intellectual property is one of your company’s most valuable assets — it needs to be protected.
Intellectual property, or IP as it’s commonly referred to, is a blanket term covering many different types of items, such as ideas that are potentially patentable, copyrightable, and valuable information or procedures and trade secrets. Types include:
Patents: A patent protects the inventor from others from copying an idea. In order to obtain a patent the inventor must demonstrate that his or her invention is novel, non-obvious and a utility of some kind.
Copyrights: This is legal protection for an author and grants them the right to reproduce, modify, publish and display their works.
Trademarks: Trademarks are a means to identify an item for quality assurance.
Trade secrets: Trade secrets are a broad category consisting of pieces of proprietary information that can range from customer lists to software coding.
Are you and your company properly covered? The business arena can be cutthroat when it comes to competing for the top spot in the marketplace. As a result, there are more and more competitors “out there” who will claim an idea or product (potentially your idea or product) was their brainchild. Patent litigation is a prime example of the growing IP legal universe.
What insurance protection is available? And is it necessary? First, all businesses probably carry a Commercial General Liability (CGL) policy – it’s the standard in business insurance as it protects you from injury and property damage claims. Most, but not all, CGL policies include a clause for personal and advertising claims. This clause will cover the content of your ads and website against copyright and trademark claims in most, but not all cases.
For example, if your company produces content (i.e. publishing, etc.), a commercial general liability policy will possibly not cover any IP-related claims. In this case you’ll need to purchase a media liability policy. But again, there are some limitations to both a media policy and a commercial general liability policy as neither provides protection for patent infringement cases. There are gaps…gaps that need to be filled to be safe.
Enter the specialty policies of patent and intellectual property insurance. Patent insurance fills the gap not covered by standard policies when it comes to patents. And intellectual property insurance is broad coverage for any IP infringements. These types of insurance coverage are gaining popularity as the number of claims that fall outside of the traditional advertising category increases.
IP defense coverage is specifically for the policyholder to protect their financial stability by pursing those infringing on their patents or rights. This type of insurance is very valuable to smaller technology companies whose portfolio is largely made up of IP.
Protecting your business’ intellectual property is important. The positive side is that you can be protected by purchasing various policies. The negative side is that it can be expensive, especially if you don’t understand the different types of coverage and what your company needs. This is where an in-depth conversation with your insurance carrier comes in. Ask questions…be safe… be covered.
This information is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice. Should you have any questions or would like to discuss your risk exposure with your commercial umbrella insurance, please contact the insurance pros at ARCW Insurance. We are here to help.