Case Study January 25, 2021

IP claims case study: Green grievance

Renewable energy company pursues competitor’s patent infringement

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A small renewable energy company develops and sells energy saving devices for use in renewable energy enabled housing. These devices incorporate machine learning to capture and assess data which provides the most effective heating programmes all year round. The company’s routes to market include distribution via energy consultants and direct marketing to large landowners. Their goal is to incorporate their products into new build projects globally.  

Research and development is very important for the company’s business model and their innovations are protected by registering patents in territories worldwide. This strategy provides the insured with exclusive rights to their proprietary technologies. They commercialise their technologies by manufacturing products containing the technologies themselves, as well as licensing a small number of their patents to third party partners better positioned to commercialise the technology.   

The insured became aware of a competitor selling a household heating kit in Europe. They believed this product was likely to be infringing one of their European patents.

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The renewable energy company had purchased an IP insurance policy with pursuit coverage included from CFC. This pursuit coverage provided legal costs cover for any costs incurred enforcing intellectual property rights against third-party infringers.

The insured worked with CFC’s claims handlers to appoint a suitable legal representative in a timely manner. Initially they considered using an IP lawyer they had used previously, however CFC’s claims team were able to recommend three additional law firms to ensure the insured had the best legal representation. The insured selected one of the recommended law firms because they had the most extensive experience in handling patent infringement disputes in Europe, despite the company operating in another country.

The cost of using the legal representative was negotiated and monitored by CFC’s claims team throughout the process. This service was a benefit to the insured because it improved the value for money of the legal representative’s work and the insured’s IP insurance claims history was in a healthier position going forward.

The legal representative was able to undertake a preliminary assessment of the competitor’s product and the technologies protected by the insured’s patent. The costs of the investigation were $3,500 which was paid by the insured but eroded their $10,000 policy deductible.

Between the legal representative and CFC’s claims team it was successfully established that:

  1. Patent infringement was likely to be occurring
  2. There were good prospects of success pursuing the competitor
  3. The infringement was likely to be causing lost revenues for the insured so enforcing their patent against the third party was commercially proportionate
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The CFC claims team approved legal representative’s legal expenses to communicate and negotiate with the third-party infringer.

After issuing a cease and desist communication, followed by subsequent correspondence to outline the insured’s intention to issue proceedings, the competitor agreed to negotiate a license agreement with the insured. The terms of the license agreement firstly required a compensatory payment of $50,000 to reflect extent of infringement to date and it also required ongoing royalty payments to the insured on all future sales of the heating device.

The legal costs for the case amounted to $125,000 which was the least the energy company would have had to pay if they did not have IP insurance. Instead, the energy company paid $33,000 and the insurer paid the remainder of the fees.  

The $50,000 settlement received was also split between the insured and insurers, with the energy company retaining $10,000 and the insurer receiving $40,000. This meant the total outgoings for the insured during this case were just $23,000, all for the successful resolution of the infringement of the insured’s patent.

Not only did the insured save money on their pursuit action, but they secured a future revenue stream having had access to quality legal representation at a competitive price with the support of an experienced claims team who were able handle the claim on the insured’s behalf saving many hours of their management’s time.

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