Do you need patent insurance?
For people who design or invent new things, patenting your idea is a form of insurance. Once you’ve patented your ‘intellectual property’ (IP), you now have a set of standardized legal protections in place should anyone try to steal or copy it.
But what most folks don’t know is that defending yourself against a claim of patent infringement – or taking legal action against someone who has infringed upon or stolen your IP – can be very, very expensive.
In the years since the patenting system was first created, the types and number of patents registered each year have exploded. In 2016, the United States Patent and Trademark Office estimated that there were more than nine million unexpired patents. That’s a LOT of IP to keep track of.
A relatively recent development in the patenting world is the ‘patent troll’. A patent troll is a person or company who acquires patents and attempts to enforce their patent rights through aggressive legal tactics including frivolous litigation and harassment. Patent trolls can cost companies and individuals untold amounts in legal fees.
Accordingly, there are two basic types of patent infringement insurance:
- Patent infringement liability insurance helps protect manufacturers, users, and sellers of IP who are accused of infringing a patent holder’s rights (like by a patent troll). Defense coverage is provided and might include additional profits and royalties to be turned over to the patent holder.
- Patent enforcement litigation Insurance covers the owner of a patent against infringement by another person. It includes the cost of legal defense to enforce the patent. The policy includes a co-payment provision, usually 25%. Excluded are the liability for compensatory or consequential damages, fines, punitive damages, exemplary damages, and multiple damages.
So, if you have a patent, you should at least have patent enforcement insurance. And if you don’t have patents on your product line, you should carry patent infringement insurance,
The cost of patent insurance varies greatly – from a few hundred dollars a year to many thousands – depending on the amounts and types of coverage, among other variables having to do with the IP itself.
For further information, contact David or Philip at Hudson Valley Agents 845-778-2141
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