Infringements of IP Rights

What should the policy cover?

There are insurance policies available which are capable of covering some or all of your legal costs. They are called 'legal expenses' policies. As their name suggests, they merely cover the costs of litigation, not damages.

Policies vary from insurer to insurer. An IP insurer should be able to provide advise on what IP rights can be covered. In fact, insurance covering the full IP rights of the property owner is preferable to more selective patent-only protection as it gives greater legal scope for any future potential defence or enforcement action.

An IP insurance policy would typically have the following features:

• It would only cover specifically identified IP. If the insured party specifies a particular patent for the purposes of the policy, the policy will only cover infringements relating to that patent, but no other IP rights. This restriction enables the insurer to charge an appropriate premium;
• It would cover expenses incurred prosecuting an infringer, known as 'pursuit expenses' or expenses incurred defending proceedings or both, depending on the needs of the policyholder. Insurers will control the payment of legal expenses and the decision to incur legal expenses. An insurer will usually need to be satisfied that the case has a good chance of success before funding legal action, particularly where pursuit expenses are involved. Your insurers will also reserve the right to withdraw funding if, for example, you do not accept reasonable settlement offers. However, insurers will not fund unlimited legal expenses. The extent of legal expenses the policy covers will be reflected in the insurance premium you pay. The longer the period of cover, the higher the amount of cover, the higher the premium payable; and
• It operates on an 'occurrence' basis. This means that, for the policy to provide cover, the infringement must have occurred during the period the policy is held, the insurer must be notified during that period, and any legal proceedings must be started during the same period. The policy will not cover legal proceedings arising from the infringement of IP rights which occur before the date the policy starts.