The Enforcement policy (Formerly called an Abatement policy) is a unique plaintiff’s policy which reimburses the Litigation Expenses to enforce Intellectual Property (IP) against alleged infringers, as well as countersuits for invalidity in Authorized Litigation.
The Enforcement policy is a blended coverage, meaning, there are elements of pure insurance (unexpected risk) and a bond (people made/moral risk). In the event the Insured loses the IP lawsuit, the Enforcement policy responds as a pure insurance policy. In the event the Insured wins the IP lawsuit and has recognized an Economic Benefit, the policy then acts as blended coverage. The Insured reimburses only the money paid out by the carrier, and retains any additional recoveries.
Enforcement policies include an endorsement providing relief from the Economic Benefit repayment of the first $100K of non-monetary benefit. Repayment of Economic Benefit reinstates policy limits, and those funds are then available to pursue other infringers.Features & Benefits
Enforcement coverage is available for any company with issued patents, patent application or provisional application; registered trademarks, trademark applications, common law trademarks, trade dress, and registered or unregistered copyrights (must be registered before asserting).
Advantages of the Enforcement policy include preventing loss of market share as well as preventing unexpected cash drain on operations. Carrying the policy often deters frivolous infringement lawsuits and reduces the pressure to settle the case too early. Protecting the IP may attract investors and strengthen the ability to license a company’s IP.
The Enforcement policy is claims made and reported. Policy terms range from 1 to 3 years with limits ranging from $250K to $10M (higher limits may be available). Copay is 10% (minimum), Self-Insured Retention (SIR) is 2% (minimum) of claim limits. Pre-existing circumstances are excluded from coverage if the Commercial Activity that led to the infringement began before the first policy period. The test is objective; it does not matter if the activity was known or unknown at the time of purchase of the Policy.
The Insured may invoke the Enforcement policy by 1) notifying the Company of the discovery of infringement and other relevant facts by completing a claim form provided by the Claims department; and 2) providing the Company with a favorable opinion letter from independent IP counsel regarding the issues of enforceability, validity and infringement.
Upon compliance with the policy terms, the Company will then authorize the suit and the policy will begin to reimburse the Insured for the Litigation Expense.
The Policy Holder controls the lawsuit; however, the Company may suggest reliable and preferred counsel to the Insured but the Insured ultimately chooses. Counsel must adhere to litigation and billing guidelines set forth by the Company to ensure the full value of the policy. The Insured dictates the settlement terms, if any.