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Insurance for IP Infringement Plaintiffs

Thanks to Annette Freeman, one of the world’s leading intellectual property authorities, I read an interesting article about insurance for intellectual property plaintiffs. Small companies worried about the cost of protecting their IP can buy this insurance, which will subsidize the cost of enforcing IP rights in court.
The devil is in the details, of course, so the policy has to be read quite closely to see what is covered, and what happens if you win.

“[S]ome of these policies may require you to reimburse the carrier for the cost of the litigation (although not all policies require this). This reimbursement obligation is triggered when you receive any type of benefit as a result of the case—not just a financial benefit. For example, if your case won an injunction that stopped the infringer (but didn’t recover money) then you obtained a benefit, and you would need to repay the carrier for what it paid for the prosecution of the litigation.”

In order to get the insurance company to pay for the litigation, the insurance company hires a “neutral” IP lawyer who decides if the case has merit. If the neutral’s review concludes the case is likely to win, the insurance company will finance the litigation — with a “copay” of course — and probably does not recognize the hourly fees regularly charged by IP litigators, so be prepared for a double co-pay.

There are lots of caveats, such as the IP has to be registered, so trade secrets are not protected. Still, in a world in which many defendants can rely upon insurance for “advertising injury,” wronged IP plaintiffs have a way of paying to protect their IP.

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