There are multiple areas of Intellectual Property, an artist’s creation, a song, a book and logos. While infringement on these may be difficult to prove if one work strongly parallels another there could be grounds for a hefty law suit and that means hefty defense costs. The Commercial General Liability policy will specifically exclude claims arising out of the infringement of intellectual property.
While you are probably familiar with the basic insurance coverage you need: General Liability, Workers Compensation, and Professional Liability did you know you can insure yourself against theft or misuse of your Intellectual Property? This is referred to as Pursuit, Abatement and Enforcement insurance.
To purchase Intellectual Property insurance you will need to prove that you have filed a registration for a trademark, copyright or patent. Your application for this insurance will contain your “description of operations” and will form a part of your policy so take care that the “description” does encompass all of your work.
The Pursuit, Abatement and Enforcement insurance policy allows you, the policyholder, to sue intellectual property infringers. The policy reimburses you for your legal costs associated with a lawsuit where you are the plaintiff. Small or mid size technology companies just do not have the funds to enforce their valuable patents or copy rights. The purchase of this type of policy allows them to fight back when their Intellectual Property is at risk. The policy limit can be as low as $250,000 or as high as $2,000,000. It does contain a co-insurance clause which means you will pay a percentage, generally 10% of the litigation cost. There is also a self insured retention clause which acts like a deductible. The policy holder will pay that amount before coverage is triggered. Your Intellectual Property insurance policy will exclude known or intentional acts you commit.
Areas of Concern
Trademarks are the lifeblood of a business. Companies spend vast amounts of time and resources to get their particular branding just right to attract the type of consumer they need for their business to thrive. The trademark of a company can be steady and reliable or constantly evolving. MacDonald’s will always have the Golden Arches displayed somewhere on their product and Honda went from the “wings” symbol in 1947 to the present day simple but widely recognized blue H logo design.
Trade Dress is not to be confused with trademarks. Trade Dress occurs when one product mirrors another existing product in some fashion. This lends itself to design, color or shape so closely resembling an existing product that it causes confusion to a consumer. An example could be the design of a watch. There are only so many ways these devices can look.
Other common forms of Intellectual Property are the copyright and the patent. Patents are generally summed up as inventions or discoveries and fall into three distinct categories. These categories are utility patents, design patents, and the far less known plant patent.
At EZ Center Insurance Services we can analyze your current risks and anticipate those you may face in the future and provide you with a complete insurance portfolio.