Popular IP insurance myths debunked
IP insurance can appear more complicated than it really is and cause some businesses to think they don’t need it, find out why they really do.
Intellectual property (IP) rights enable a company to invest in and reap the benefits of their creativity, innovation, and branding, and prevent others from copying what they have developed. However, IP insurance can appear more complicated than it really is and cause some businesses to think they don’t need it.
To clear up the confusion, here are four of the most common misunderstandings that businesses tend to have about IP insurance and how to overcome them.
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Only large corporations need to worry about IP risks
SMEs are the most common target for patent trolls. SMEs may also find themselves targeted by large competitors who want to prevent competition and who have more established IP portfolios because of their size and age. IP can present a classic David versus Goliath scenario, and without sufficient resources, the smaller organization can face more dire consequences.
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We don't / do have a patent, so we can’t infringe
A claim of infringement has nothing to do with the defendant’s own IP, but rather the IP of the claiming party. Infringement is the result of a business activity. Holding an IP right (patent, copyright, trademark) doesn’t protect you from infringing on someone else’s IP, nor does lack of IP rights indicate that you can’t infringe. IP rights often overlap and rarely cover an entire product or process. Sometimes patents are granted to different parties for the same thing, and there are cases where an awarded patent will later be invalidated.
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We came up with the idea ourselves, so we can’t be infringing on anyone’s IP
It may be true that a business developed an idea from scratch, most inventions today are a ‘next step’ innovation rather than an entirely new idea. Sometimes multiple parties in a sector will come up with the same solution to a problem without realizing it. Just because a company develops something in-house, doesn’t mean it can’t infringe on another’s IP rights and just because they aren’t aware of someone else’s IP, it also doesn’t mean they aren’t infringing. Even if a business feels confident that it is not infringing, it doesn’t mean that someone won’t allege that they are, and it is important to be able to defend such allegations.
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We’re not a tech company, so we don’t need to worry about IP
IP is valuable in most, if not all, sectors. If it is valuable to a business, then it is probably valuable to a competitor and is worth protecting! The automotive and energy sectors are obvious examples of areas that share the patent or trade secret risk with tech companies. Food and beverage, agriculture and chemical industries have similar risks. For companies in fashion, homeware and other consumer sectors, trademark, copyright, and design are often important. Many sectors have exposures related to technology even if they aren't a tech company themselves. Simply using technology in a business could result in infringement.
IP has become one of the most critical assets for today’s modern businesses. Recent studies show that intangible assets contribute twice as much to the total value of manufactured goods sold than other forms of tangible capital.
Make sure your clients have the right cover in place. Find out more about CFC’s IP policy or get in touch with the team today.