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The IP journey and risk mitigation

The IP journey and risk mitigation

Paul Storer

Senior Policy Adviser in the Business Support Policy Team at the IPO

Resolving IP disputes can be costly and the Intellectual Property Office continues to seek to reduce costs for businesses, not only in relation to disputes but, at every stage of the IP journey.

We have made some real progress in improving access to justice at proportionate cost for small firms involved in IP disputes. We have helped reform of the Patents County Court (now the Intellectual Property Enterprise Court [IPEC]1) and modernised the IPO Mediation Service.2  We have also worked with legal organisations like the Chartered Institute of Patent Attorneys to encourage the introduction of IP Pro Bono.3

Beyond the area of legal disputes we have focused our energies on improving the understanding and maximising the benefit of IP for growing companies. For instance, with our partners, we have introduced an IP Audit Scheme to help businesses to recognise and understand their intangible assets and to manage them more strategically. And our IP Finance Toolkit4 helps businesses, banks and investors speak the same language in relation to IP assets.

We are working with the insurance market to raise awareness of, and provide access to, IP insurance – specifically Before the Event Legal Expenses Insurance (BTE LEI) – as an option to transfer the risks of a costly IP dispute. Our interest in insurance is in its potential to deter would-be infringers (or at the very least bring parties to the table) and not to facilitate litigation.

The capped scale of recoverable costs (maximum £50k) in the IPEC has brought some certainty around financial exposure for business (the loser pays in the UK). It has also presented an opportunity for insurers: indemnities could be lower which can result in lower premiums. Consequently, there are now far more affordable IP insurance products on the market, some of which are centred on IPEC.

Of course, with all types of insurance the reality is that the higher the risk, the higher the premium. IP insurance is no different. In some cases, IP insurance premiums can climb quite steeply depending on sector and geographical cover. So, our advice is two-fold: to shop around for quotes and; where possible, take out cover as early as is practical.

You will find useful information on IP insurance providers and advice to help you to navigate the ins and outs of IP insurance5 on the IPO website. Aside from cost, the typical misconception around IP insurance is that ‘it doesn’t do what it says on the tin’. Like any insurance, it is important to understand clearly what the insurance does or does not cover – the T&Cs. Here it is crucial to consult a specialist insurance broker to avoid any surprises later – you will also find a list of IP brokers on our website.

The IPO is working to improve commercial insurance brokers’ understanding of IP and IP issues around the country. We want to make sure that any business can access a specialist broker in its locality and build an understanding and relationship with them; the earlier the better. A well informed broker will advise on a strategy – for instance, taking out narrower geographical cover at the outset can mean the initial premiums are lower.

Any decision whether to take out IP insurance cover or not, must be based on sound analysis and not on misconceptions around its cost and efficacy. Are intangibles at the heart of your products or services and business model? What is the risk to them of challenge from competitors? If you could not afford to assert them (or defend yourself against legal action) what impact would that have on the company?

You should note that the transactional costs associated with an IP dispute are the most significant and can potentially be commercially terminal. It is curious that businesses insure against many risks, for regulatory and other reasons but key assets, the intangibles at the heart of the business, are often left exposed.

It might be right to say that the imperative to consider the entire IP journey – from recognising and understanding the assets, appropriately protecting and commercialising them and, lastly, ensuring potential risks and threats are considered from day one – has never been greater. The government is supporting and encouraging UK businesses to drive sustainable international growth and to underpin its agenda for a global Britain. There are many uncertainties in making that move into other marketplaces but the right IP insurance cover may provide a business with some confidence to take the first step.

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