We had so many great questions come in during our Intellectual Property Insurance webinar earlier this month and the speakers were gracious enough to spend some time putting together answers to some of those questions we were unable to address live.
1. Briefly discuss IP exclusions on the Cyber form.
IP related losses are generally excluded from Cyber coverage.
However, some carriers are willing to cover losses relating to contractual indemnity obligations in the event that an Insured loses a third party’s trade secret information due to a cyber incident.
2. Can you talk specifically about policies designed to cover only trademarks? Many small companies have logos and firm names similar to larger unrelated companies and want protection from litigation.
A good defensive IP policy is designed to be flexible and is customized for each buyer so that it covers only what the Insured wants to protect. For example, a company that wants to protect certain brand-related IP assets can schedule only those assets and thus customize the defensive IP policy to apply exactly to what they are trying to protect.
3. Insured is selling a water bottle on their website that they co-designed and imported from Chinese Manufacturer. Being accused of patent infringement for water bottle design.
What type of policy do they need to protect them against claims such as this?
They may be able to protect against catastrophic loss in the ongoing suit by purchasing a specific contingency policy. A defensive policy will provide protection against future infringement claims.
4. Is there still a typical “vetting” fee upfront before firm quote can be received?
There are carriers available that can usually provide an initial quote without charging a fee, However, when special protections are requested, such as defense against claims of trade secret misappropriation, an initial underwriting fee may be required.
5. Do you need a lawyers confirmation there is no infringement before insuring?
No, IP underwriters typically rely on in-house analysis and bring in outside counsel on an as-needed basis.
6. What about indemnity to a customer for infringement claims he may face from use of a product?
A defensive IP policy protects an alleged infringer against such claims. The entity that is concerned that they will be alleged to infringe can obtain a defensive IP policy to protect itself or can request a contractual indemnification from their suppliers.
A component of a good defensive IP insurance policy is a contractual indemnification backstop, which can protect such a supplier from losses related to such contractual indemnity obligations.
In conclusion, there are two ways to solve for this problem, both of which allow for risk transfer through a defensive IP policy.
7. How often do the carriers get involved in the valuation of the IP? How/how often?
Underwriters of defensive IP insurance are concerned with the potential losses that will be covered by such a policy, including defense costs, damages from infringement claims related to products or services, and contractual indemnification obligations. While damages from infringement claims related to products or services require an understanding of the value relating to such products or services, defensive IP underwriters do not value IP assets.
Residual value insurance is a different type of IP insurance that was not the subject of this webinar. Residual Value underwriters will conduct an exercise to value IP assets as part of their underwriting process.
Did you miss the live webinar? PLUS members can access the on-demand recording here.
Thank you again to our speakers!
Director of Marketing & Development at Ambridge Partners
Intellectual Property Counsel at Ambridge Partners
Partner, Chair IP Litigation at Goodwin
Vice President at Marsh FINPRO