Despite innovative ideas being worth billions of dollars as proven by the founders of Facebook, Snapchat, Airbnb, and many others, less than 1% of intellectual properties (IP) are insured, according to international insurer Tokio Marine Kiln.
“Today, a company’s IP can relate not just to its brand and designs for products, but also to the processes and algorithms it uses to create its competitive advantage – all of which can be under threat,” said Aoife Woulfe, underwriter at specialist insurer Tokio Marine Kiln.
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Almost all businesses run the risk of being accused of infringing on the intellectual property rights of a third party. According to a recent report by PwC, the average value of damages awarded in patent lawsuits in the US has reached US$7.3 million in the past five years. Aside from court-ordered damage payments, companies will also shoulder the legal fees involved, which typically range from US$3 million to US$10 million, according to the World Intellectual Property Organisation.
“This is where IP insurance could be crucial in protecting a company’s bottom line,” said Woulfe. “The insurance we offer at Tokio Marine Kiln covers representatives’ fees and expenses as well as damages awarded, so CEOs and their lawyers can rest assured if they are subjected to an infringement case.”
However, Woulfe said that many companies are not even aware that IP Insurance exists. Many of these firms, she said, have been self-insuring the risk for years, and are only realizing just now that it is possible to transfer that risk to insurance.
“We are working closely with businesses in all sectors, from product manufacturers to online retailers to raise awareness and provide an important element of risk management via insurance,” she added.
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