For many companies, a significant portion of their net asset value is represented by intangible assets. Intellectual Property (IP) falls into this category. While protecting physical assets is a given, "creations of the mind" can also be precious. They can drive future growth and financial success. So, how can you protect them?
A brilliant idea can quickly lead to substantial wealth for innovators and entrepreneurs. Every great idea begins as a concept. Whether it's a successful sportswear brand,1 or a billion-dollar acquisition by a tech giant like Facebook.2 For many start-ups and high-tech companies, intellectual property may account for much of their book value.
Despite this, people often overlook intellectual property risks. As well as the importance of safeguarding these intangible assets. The potential risks of not protecting your IP can be significant. To help your business defend against these risks and protect its valuable ideas, you need the right protection in place.
Depending on what you've created, there are different types of protection.3 This is where IP insurance comes in.
IP refers to creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce. It is legally protected through:
These protections encourage innovation. They allow creators to benefit financially and maintain control over their work. IP rights help ensure creators can be recognised and compensated for their efforts. It creates an environment where creativity and innovation can thrive.
Protecting your IP makes it easier to take legal action against anyone who steals or copies it.
IP insurance is a liability policy. Its purpose is to protect a business against legal fees, damages and expenses incurred in a judicial proceeding relating to IP.
There are two main types of IP cover:
However, as every risk is different and each tech company’s requirements may vary, cover can be tailored to suit a business’s individual needs.
Insurance products can cover one or more rights and a variety of IP risks, including:4
IP insurance can help protect your business against several disputes relating to a breach, this includes:
To decide if your business could benefit from investing in IP insurance, you must first:
The Intellectual Property Office (IPO) has a range of free online tools. So you can learn more about trademarks, designs, patents, and copyrights.4
When it comes to technology, specifically computer software in the UK, it is protected by copyright as it is seen as a work of literature. Here are the top three types of client dispute scenarios seen in the sector:
Replicating a software product is not classed as copyright infringement unless the software code is copied. However, this does not stop claims being made for legal costs to defend against the allegations.
Businesses may need to outsource software development to third party contractors. When this happens the IP created is generally owned by the contractor even though they are being paid to develop it. That’s why having clear terms is essential when outsourcing development work.
When a business uses software under licencing agreements, it should be clear on any restrictions on how many users it can have. Otherwise, it could be exposed to breaching IP rights.
It's important to note that IP insurance products protect intellectual property. This can include software and online content. But this doesn't mean that it protects against all attacks on your digital platforms. You will need additional cyber insurance to protect against cyber threats.
Additional aspects generally not covered by IP insurance include:
This highlights how important it is to understand the specific terms and limitations of an IP insurance policy.
If you’re not sure whether you need this cover, or if you want to purchase IP insurance contact a Marsh Commercial adviser.
Sources:
2. vlinkinfo.com/instagram-success-story
3. gov.uk/protect-your-intellectual-property