Your company is vulnerable to charges of IP infringement by simply making, using, selling, importing or offering for sale a product and/or service; or, if you own valuable technology on products, processes or methods of doing business. Also, if your company is experiencing or planning a merger and/or acquisition, or if your vendor and supplier contracts require indemnification for IP litigation, you will have additional exposure to IP litigation.
The fact that your company has products protected by patents does not guarantee that you will not be sued by a third party, such as a patent troll or a competitor, holding similar IP rights. Even if the case against you is unjustified or frivolous, legal bills will still be incurred in funding the defense and paying potential damages.
Features & Benefits
Infringement defense coverage is available for the Scheduled Products of your company: products that you make, use, sell, offer for sale or import, or where you use a trademark and/or service mark and/or use copyrighted materials in commerce. Coverage may also be available for business processes and services.
$50,000 of Troll coverage is also included in the Defense policy, and covers your non-Scheduled, non-Core Products, such as your routine use of office equipment such as printers. See Troll Defense insurance. Also, $50,000 of Multi-Peril insurance coverage is also included in the Defense policy, and covers re-design, re-call, remediation, business interruption and/or loss of profits that may arise if you are sued for patent infringement and you lose. See Multi-Peril Insurance. Higher limits may be available for Troll and Multi-Peril protection.
Advantages of the Defense policy include preventing abandonment of market share as well as preventing unexpected cash drain on operations. Carrying the Defense policy often deters frivolous infringement lawsuits and provides adequate litigation funds to optimize a favorable outcome on the merits. Insurance may attract investors, and reduces the pressure to settle infringement cases.
Policy terms range from 1 to 3 years with limits ranging from $250K to $10M (higher limits may be available). Copay is 10% (minimum), Self-Insured Retention (SIR) is 2% (minimum) of claim limits. Pre-existing threats of infringement are excluded from coverage, and damages will be covered back to the date the infringing activity began.
UCC Obligations. For a slightly higher premium, your policy is provided with an Endorsement that extends the Infringement Defense policy to cover responsibilities under the UCC to your customers. See Indemnification under the UCC.
Defending Additional Insureds. For a higher premium, your policy is provided with an Additional Insured Endorsement that extends the Infringement Defense policy to lawsuits that are filed against the Additional Insureds of your technology (who could be licensees of your technology, or customers of your products). See Licensing Agreements.
Using the Defense Policy
You can invoke the Defense policy by 1) notifying IPISC of accusations of your company's infringement of someone else's IP, and other relevant facts (such as a copy of the lawsuit filed against you), by completing a claim form provided by the Claims department; and 2) providing IPISC with an opinion letter from an independent IP counsel rendering an opinion of non-infringement favorable to the named insured. See: List of Approved Lawyers for Opinion Letters, IPISC's panel of lawyers to prepare these opinion letters.
Upon compliance with the policy terms, IPISC will then authorize the lawsuit filed against you. You have choice of legal counsel to represent you in the lawsuit; however, IPISC may suggest reliable and preferred counsel for you to use - but the choice is yours. You also decide the final settlement terms.
Once IPISC confirms your protection under the Defense policy, the policy will begin to reimburse you for your litigation expenses. Your legal counsel must follow the litigation and billing guidelines set forth by IPISC to ensure the full value of the policy. See Litigation Management Services.