Protecting your intellectual property in a sea of ideas
Intellectual property insurance may help you enforce your rights.
While the basic principles of intellectual property rights are simple, the entire realm of U.S. intellectual property law reflects the complexities and nuances of our world. Considerations include overlapping domestic and international statutes and treaties, criminal and civil law, court precedent, good faith, fair use and litigation in which billion-dollar product lines turn on the finest details of a patent.
Major firms, renowned artists and studios, and organizations intensely reliant on intellectual property rights often keep specialized experts on staff, recognizing that seven-figure litigation expenses may be the cost of doing business at the cutting edge of technology and culture. For everyone else operating a business, creating original works or novel inventions, or using others’ intellectual property as part of your marketing campaign, a floor full of patent and copyright attorneys may be a touch overkill.
Still, intellectual property litigation represents a serious financial liability, and evidence suggests these costs are growing rapidly – weathering what comes may no longer be a viable strategy. However, in recent years, the market has produced a more measured approach for those facing less exposure to litigation than leading technology firms.
Insuring for defense
Defensive intellectual property insurance policies can be purchased to protect you and your business against damages and litigation expenses when you are the subject of an infringement claim. Defensive policies can also extend to your vendors and other downstream entities to whom you hold contractual obligations.
Defensive policies can also protect you against a claim that your registered intellectual property is invalid – a risk that can pose an existential threat to some businesses or cause a startup primed for sale to lose value at a critical juncture.
Policies can also be purchased that protect the value of intellectual property to suit a variety of circumstances, including the risk of theft.
Insuring for enforcement
To realize the full benefit of your intellectual property rights, you have to be willing to defend them. Offensive insurance policies can help mitigate the cost associated with following through with infringement claims against third parties you believe are violating your rights.
There are also third-party services that will scour the internet for unlicensed usage of your intellectual property, acting as a vanguard in defense of your rights.
A systemic approach to protecting your intellectual property
As with anything, an ounce of prevention is worth a pound of cure. If you find yourself in an intellectual property dispute, you’ll be glad you spent time creating rigorous processes and documentation to assert your rights. This may include registering copyrighted works with the U.S. government, having employees sign nondisclosure agreements, taking active measures to protect your trade secrets and bulking up your cybersecurity processes.
Individual creators – authors, artists, social media stars and influencers among them – need to also be careful about how they publish their work and to whom they assign rights.
As part of this, you may consider consulting with specialist attorneys and technologists.
Insurance may be an important backstop to these processes or may be the first step in protecting a specific piece of intellectual property. Your financial advisor can help parse the details of available policies and providers.
- According to the U.S. Patent Office, 41% of U.S. domestic output came from intellectual property-intensive industries in 2019.
- Those firms represented 44% of all employment in 2019 or 62.5 million jobs.
- U.S. copyright is granted at creation. However, works can be registered to better establish ownership.
- In 2020, the U.S. Copyright Office registered 443,911 claims of authorship.
- The first formalized intellectual property law is credited to Venice in 1474. It was a sophisticated statute that recognized inventors’ right to profit from their creations with limited terms of exclusivity.
Sources: U.S. Patent and Trademark Office; U.S. Copyright Office; Insurance Business America Magazine; Marsh McLennan; Wired
Raymond James does not provide tax services. Please discuss these matters with your legal professional.