The Enforcement 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.
Any company is vulnerable to charges of IP infringement by simply making, using, selling, importing or offering for sale a product and/or service; or, if it holds sought-after technology on products, processes or methods of doing business. Also, companies experiencing or planning a merger and/or acquisition, and vendor and supplier contracts requiring indemnification for IP litigation all have exposure to IP litigation. The fact that a company has a patent on its product does not guarantee that there will not be a suit brought by a third party, such as a patent troll or a competitor, holding similar IP rights. Even if the case against the insured is unjustified or frivolous, legal bills will still be incurred in funding the defense and potential damages will still be awarded by the court.
Multi-Peril IP ReimbursementOverview
The Multi-Peril IP Reimbursement rider (MPIP) provides first party coverage for loss of value because of adverse intellectual property (IP) events such as Business Interruption, Loss of Commercial Advantage and the Cost of Redesign, Remediation & Reparations. These adverse happenings are in the form of legal actions by or against IP owners and/or third parties.
$50K (USD) per Claim/Aggregate or 10% of Policy limits, whichever is less, is automatically included as a Rider to the standard IP Enforcement or Defense Insurance Policy. For an additional premium, limits in excess of $50K are available up to $1M; higher limits may also be available for an additional premium.
The MPIP rider responds after the final adjudication of a civil proceeding that directly caused or established the loss of value.
The customer base is IP holders or third party beneficiaries who are likely to purchase the enforcement product; or on the defense side, IP holders or third party beneficiaries, any manufacturer or entity in the chain of commerce which is subject to being sued for IP violations.
Unauthorized Disclosure of Confidential Information (UDCI)Overview
This policy reimburses the litigation expenses and/or damages which allege an Unauthorized or Unintentional Disclosure of a third party’s Confidential Information by the Named Insured; or, which alleges an Unauthorized Disclosure by an employee or person under the direct control of Named Insured or a former employee of the Named Insured on whose behalf of the Named Insured is responding pursuant to a written or legally imposed obligation to do so. There is a ninety (90) Day Exclusionary Period under the UDCI policy. Any threats of infringement brought during the initial 90 days of the policy are excluded from coverage. The 90 days are not lost; they are added to the end of the last Defense policy held by the Insured. Pre-existing threats alleging Unauthorized Disclosure, or, where the Named Insured has knowledge prior to the effective date of the policy of any activities which are or could be the basis for alleging Unauthorized Disclosure.
Patent Assertion Entities” (also known as trolls) are companies that buy (usually inexpensive poor-quality) – patents, and use them as a basis for demanding royalty payments from other companies while threatening to sue non-compliant companies. Frequently trolls do not disclose what patents they own, or what specific functionality of a technology is infringing. Instead the troll challenges the entrepreneur to hire expensive lawyers and fight, while simultaneously offering to settle the claim less expensively than the lawyers will cost.
Settling with trolls often requires an up-front payment, continuing revenue share payments, agreeing to issue a press release that praises the troll’s technology and “fair licensing terms,” and signing a non-disclosure and non-disparagement agreement that stops the “victim” from speaking freely about this extortion.
Collateral Protection Insurance (CPI)Overview
Collateral Protection Insurance (CPI) provides a vehicle through which an owner of intellectual property (IP) can utilize their IP as collateral for a loan. In essence, the issued policy protects against collateral default.
In general, companies may risk going out of business if they are not able to protect their innovations from the predatory business practices of others. One of these predatory business practices is extorting money from companies by entities known as Patent Trolls bringing ill-founded lawsuits based upon overly-broad patents. The real threat of Patent Trolls prompted a response from the public sector in the form of the America Invents Act (AIA). While the America Invents Act (AIA) was well intended in curbing the “Troll” type activities, it also carried with it the unintended consequence of creating a formidable barrier to legitimate enterprises in the form of Post.