Advised Account Executive
Intellectual property can be the cornerstone of your company, and yet it’s often not something you can put on your company’s balance sheet. So what is it, how can you insure it, and what’s happening in the world of IP right now?
What is intellectual property?
Intellectual property is anything you create with your mind – it’s an umbrella term for intangible assets. It covers everything from ideas and inventions, designs and artwork, symbols and logos, stories and brand names.
While intellectual property isn’t something you can necessarily hold, it is a highly valuable asset as it represents a company’s competitive advantage. It’s also not something that comes easily – intellectual property comes with time and skill, it’s an investment in people and the nurturing of talent.
Intellectual property, therefore, is a hugely valuable commodity, often worth much more than a company’s physical assets.
The different types of intellectual property
Intellectual property is usually ring-fenced into categories such as patents, trademarks, and copyrights. These categories allow the owners to ensure they have exclusive legal rights to use their intellectual property.
Patents cover things like code and inventions; trademarks cover unique business identifiers, such as logos; and copyrights cover the written word as well as photography, music and online content.
Digital assets are also increasingly thought of as intellectual property and cover a variety of assets from proprietary code, algorithms and software to online content such as NFTs, or non-fungible tokens.
What is intellectual property insurance?
Intellectual property insurance – or IP for short – may not be suitable for every business but it does, however, provide potentially useful cover for companies in the tech and tech development space.
Fintech and medtech are research-heavy industries and with this comes an increased need to protect a company's assets and creativity from interference by competitors.
These are also spaces of rapid, global innovation with both well-established and startup players.
IP insurance can be crucial to obtain as a smaller tech business to try to fend off more long-standing companies from taking your intellectual property.
Depending on the cover you get, IP insurance may cover legal costs and any damages involved in defending or settling a claim of infringement. It could also cover legal costs if you want to take action against another party for infringing on your IP.
There have been a number of high-profile IP cases over the years, most recently easyGroup taking legal action against a Leicester-based pop group, formerly called EasyLife.
The band agreed to change their name as the cost of the legal action, which cites brand theft and trademark infringement, would be too high.
There are, however, several companies that eschew their intellectual property rights, and instead open source their inventions or ideas.
Take Moderna – a key player in the Covid vaccination roll-out – that chose to waive its IP rights to the Covid-19 vaccine, allowing researchers in South Africa to copy the vaccine.
While an extraordinary breakthrough on the path to mass inoculation across the developing world, an equally extraordinary breakthrough in the patent debate, by allowing the world to benefit from their research.
Intellectual property across the globe
If you’re a global company, it’s important to note that once you register your intellectual property in one country, it’s not automatically registered globally.
There's also not a globally consistent definition of intellectual property or consistent rights.
To that end, it’s advisable to register your intellectual property in each country you operate in, and be aware of the various laws and regulations that govern your IP.
When considering registering your intellectual property in the US especially, it’s important to consider “patent trolls”. This is a term for those who exploit loopholes in the current US patent system in order to make their money.
They do this by filing for patents without any ambition to develop a product and instead file false claims against anyone that infringes these patents.
What are the key trends in intellectual property insurance?
The UK Government have long talked of their goal to make the UK a global hub for innovation by 2035. With the UK likely to reach five million startups by the end of 2023, the patent office will be glad they cleared their historic backlog last year, as over 19,600 patent applications were filed between 2022-23.
This is an almost 4% increase on the previous year, and it’s been steadily rising since the 1990s.
Unsurprisingly, artificial intelligence-specific patents have seen a strong upward trend, specifically in the medtech sector, where applications have quadrupled since 2018.
According to research by law firm Marks & Clerk, the growth of medtech AI patent applications has surpassed overall growth in the industry.
Globally, the trend is similar, with a slight decline in applications in Q3 of this year. China is leading the charge, taking a 45% share of the total AI patent filings via companies like Ping An Insurance.
With this in mind, it was interesting to read the guidance from the Five Eyes security alliance – an intelligence union made up of the UK, Canada, the US, Australia and New Zealand – who recently urged global vigilance against intellectual property threats from hostile states.
They warned that Chinese spies are focusing on stealing industrial trade secrets in a bid to gain a competitive advantage – especially in emerging technologies like AI, fintech and medtech.
The alliance then laid out five basic “principles of secure information” to avoid companies of any size falling foul of espionage. Ken McCallum, MI5 director general said that each of the Five Eyes countries have seen a “sharp rise in aggressive attempts by other states to steal competitive advantage.”
Should I consider intellectual property insurance?
Intellectual property insurance is something you might consider if you have intellectual property that’s valuable to your business model. For some companies, it won’t be right, but for others, it’ll be paramount.
Understanding whether you need it is, however, important as the complex nature of IP litigation and the level of expertise required by lawyers, any defence costs can be substantial. There have been cases where companies that don’t have this cover in place have ended up closing up shop due to IP litigation.
Intellectual property isn’t just a concern in the country you’re headquartered in, but is a global issue. With eight billion people in the world, can you guarantee you’re the only person that’s thought of the exact tech you’ve built?
If you think you might need intellectual property insurance, reach out to one of our team to learn more.
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.