Are you developing innovative technologies? Do you own patents, software or trademarks? Does your business operate, in whole or in part, in the United States or Canada?
If so, your company may be exposed to the risk of patent trolls.
These entities, also known as NPEs (Non-Practicing Entities), acquire patents and turn them into a business model of their own: sending demand letters, seeking licensing fees, and initiating litigation to obtain settlements or financial compensation.
Their main weapon? The cost of litigation.
In the United States, an intellectual property dispute can generate hundreds of thousands — and sometimes millions — of dollars in legal defence costs. Even when companies believe their position is entirely justified, many choose to settle rather than face the uncertainty and expense of lengthy legal proceedings.
The companies most exposed include:
Technology start-ups
Biotech and medtech companies
Software publishers and developers
Industrial companies developing proprietary technologies
European businesses with commercial or industrial operations in North America
Much like cyber risk a few years ago, the patent troll threat has become a fully-fledged economic and financial risk.
Specialised insurance solutions are available.
Intellectual Property (IP) insurance policies may provide cover for:
Legal defence and expert costs
Negotiation and settlement expenses
Certain damages and indemnities covered under the policy
Enforcement actions to protect and defend your own intellectual property rights
These coverages can be arranged through dedicated IP insurance programmes or integrated into certain corporate liability insurance structures.
This raises a simple question:
If your company received a demand letter tomorrow alleging patent infringement in the United States, would you have the financial and insurance resources to respond effectively?
At Frenchbrokers, an industrial risk insurance broker, our role is precisely to identify these emerging exposures and structure insurance programmes tailored to each company’s actual risk profile.
