Intellectual Property Insurance
The Value of IP
Businesses rightly take great care to protect their assets – from securing property insurance to promoting workplace safety. However, most businesses owners ignore what is often their most valuable asset – IP.
Studies have found that up to 80% of a company’s value can be derived from its intangible assets but it is unusual for balance sheets to truly reflect how important they are to a business.
Whatever industry a business operates in it will have some form of valuable intellectual property. Whether a company or product name, a piece of technology or a design, these are key business assets with real commercial value. They can be bought, sold, licensed or used as security against loans. They are the cornerstone of business value.
When looking to raise funds or exit a business investors or potential purchasers want to know that intellectual property has been identified and adequately protected. If not, value will be lost. It is therefore imperative for businesses to maximise the value of their intellectual property portfolio in order to keep ahead of the competition. IP insurance which meets the legal costs of taking or defending legal actions helps protect that value and bring peace of mind to business owners and investors.
The Risks of IP Litigation
Why buy IP insurance?
At Volune Financial Services, we know how costly litigation can be. Whether a client discovers their IP being infringed upon or whether they have inadvertently infringed on someone else is rights, difficult decisions have to be made and actions taken. In some cases disputes relating to intellectual property can be settled fairly quickly, but the majority of cases take time and significant cost to resolve. Unfortunately, IP litigation is not cheap, and this is one of the dangers of IP litigation.
If a client does not have the cash reserves or intellectual property insurance to cover these costs, they have little option but to settle claims on unfavourable terms or allow the infringement to continue, which very often results in financial and reputational harm, and the devaluing of their intellectual property.
None of the above outcomes are satisfactory, but they can be avoided by having the right IP insurance in place.
So, if like most businesses, you are investing money and resource into building a brand, technology or product, I would strongly urge you to investigate the benefits of IP insurance. Assets of this nature are intangible, which makes it very hard to place specific value on them should they be infringed upon. It may seem like a strange idea to insure your intangible assets, but these are often the most valuable business assets you have and the cost of preventing their theft can be devastating.
Benefits of IP insurance
Purchasing intellectual property insurance adds real value to a business and there are many benefits of purchasing IP insurance through a trusted intellectual property insurance broker. Financial benefits such as protection of your business cash flow, is vastly important as the cost of litigation is one of the main dangers of IP infringement. Other benefits include the deterrent aspect and reassuring investors that, if necessary, funds are available to protect their investment..
Here is how our intellectual property insurance services can add value to your business:
Protecting cash flow
Intellectual property litigation is hugely expensive and can have a devastating impact on the value of a company. Right-holders often cannot afford to take decisive action which reduces the value of the intellectual property and the business itself as infringers know they will get away scot free.
Our policies will meet the cost of the litigation allowing you to take swift and decisive action without affecting the financial position of your company.
Providing a deterrent
Once you have purchased a policy with us we will provide you with a Safeguard IP logo to add to your marketing literature. This logo confirms that intellectual property insurance is in place and will make potential infringers think twice about copying your brand, design, technology or creative works.
Improving your negotiating position
If you are involved in litigation and your opponent knows you have the benefit of an insurance policy you are less likely to have to settle on unfavourable terms, thereby limiting the risk of unsuccessful litigation. Being in a position of strength can also generate licensing opportunities.
Giving you the ability to indemnify large licensees
It is often the case that larger customers/licensees demand indemnification against the costs of intellectual property disputes. In many cases it would be unwise to give such indemnities without the benefit of an insurance policy to protect against these sizeable risks.
Adding value when licensing or assigning your rights
Having an insurance policy for intellectual property in place will give comfort to a licensee that if an issue does arise, you, as the licensor, have the resources to take decisive action. Similarly, having insurance in place makes your intellectual property more attractive to a purchaser if you are looking to sell your rights.
Reassures lenders and investors
In the modern economy most business value does not lie in tangible assets. Nowadays, a business’s real value lies in its intellectual property. Having IP insurance in place gives lenders comfort that resources are available to maintain the value of the right if it is infringed. It also shows prudent planning and an understanding of the importance of intellectual property to your business.
Considering the amount of money spent on intellectual property (in the form of R&D and marketing) and the financial damage litigation can inflict, can your business afford not to have intellectual property insurance?
Please do not hesitate to get in touch with us to arrange a free consultation without obligation or to discuss our services further