The first step in extracting value from intellectual property is to avoid business loss by infringing another’s assets. The proliferation of the Internet and the increased importance of intellectual property in the overall economy have made intellectual property risks among the most significant for many types of businesses. Intellectual property litigation has become more expensive and more prevalent. Insurers perceive that courts have stretched policy language to cover unforeseen intellectual property risks. Insurers have responded by revising the language of their policies in an effort to exclude coverage for those risks. At the same time insurers are beginning to offer new policies to address new intellectual property risks. The result is an insurance market in flux. Rapidly changing policy language and policy availability requires increased vigilance and study of available options by insureds. It is complicated by the manner in which new policy language will be interpreted and enforced by the courts. Most businesses have what is called a commercial general liability policy (CGL). A CGL insures against a wide variety of risks, many of which have nothing to do with intellectual property. The current trend is towards ever more narrow GCL leverage coverage. Businesses cannot depend on the GCL policy to address all their insurance needs for the intellectual property and e-commerce areas.
There are now a number of insurance companies that offer insurance apace costs associated with infringement of patents only, or infringement or some combination or all of patents, trademarks, trade dress, copyrights and trade secrets. These IP infringement policies vary by carrier and property covered. When considering such insurance a company must consider the overall rate of litigation in their industry and by key competitors specifically. Any policy should be examined carefully for (1) scope of coverage, (2) covered territory, (3) cost and indemnity limits, (4) special considerations. Such special considerations often include whether or not the costs of complying with an injunction, settlement, or cease-and-desist are included. They also vary by the date which reimbursement to the insured are due. Because of the limitations of these policies many companies self-insure and/or join defensive patent pools as an alternative to insurance.