AtlasCaptives.com: Intellectual Property - What To Know About, What To Cover
Intellectual Property: What To Know About, What To Cover
What do artificial intelligence, the marijuana business, stone fruit, craft beer and China all have in common? Simple, right? They have all have appeared in the news recently in stories regarding the protection of intellectual property rights.
While the nuances of intellectual property can be both intricate and fascinating, the reasons for carrying intellectual property insurance are fairly straightforward. There are essentially two scenarios in which having intellectual property insurance can be crucial — namely if you breach someone else’s intellectual property or if someone else breaches yours.
Yet in a world in which an intellectual property breach can be as inadvertent as using unlicensed music on a digital video that goes viral, it may be instructive to review the whys and wherefores of intellectual property with an eye to considering what is and is not covered.
What is intellectual property law?
Broadly speaking, intellectual property is the branch of the law dealing with the protection of the property rights of people who create original works of any kind. It covers all types of creative products from novels and music to inventions, company identification marks, proprietary processes and even plant varieties.
The purpose of intellectual property laws is to actually encourage new technologies and creative endeavors, artistic expressions and inventions while promoting economic growth. The required investment of time and money will only occur when individuals have reason to believe that their work will be protected, thereby allowing them to benefit from their labors. The creation of new jobs, the development and spread of new technologies and processes, and even the advancement of beauty in the world around us are dependent on such protections.
In the United States, there are three basic mechanisms for the protection of intellectual property, each of which has different functions.
Copyrights, patents and trademarks.
Copyrights protect the expressions of the creative arts. A copyright confers upon owners the exclusive rights to reproduce their work, as well as publicly displaying or performing it. Importantly, it also includes the right to create derivative works. Explicit in such protection is the economic right to benefit financially from the work as well as to prohibit others from doing so without permission. It is important to understand that a copyright does not protect an idea, only how such ideas are specifically expressed.
A patent protects an invention from being copied, sold or used by others for a specified period of time. There are three different types of patents available in the United States—utility, design and plant.
A utility patent protects an invention that has a specific function, such as a chemical, machine or technology. A design patent protects the unique way in which a manufactured object appears. A plant patent protects plant varieties, including hybrids, that are reproduced asexually.
Securing a patent is both complex and time-consuming. Inventors should never assume their creation is patented until they have applied and been approved by the U.S. Patent and Trademark Office. To make certain the correct paperwork has been filed and proper procedures followed to get the patent needed to protect an invention, it is always a good idea to hire an intellectual property attorney.
Lastly, trademarks protect the identifying trade names and marks of products and companies. The purpose of a trademark is to assist consumers in distinguishing products and competitors from each other. A trademark is automatically assumed when a business uses a certain mark to identify its company; the familiar ™ symbol may be used without filing their symbol with the government.
Now that we’ve covered the basic protections avaialble, what is the role of intellectual property insurance?
Intellectual property insurance.
Intellectual property insurance reimburses the insured for loss of income, including loss mitigation expenses and legal expenses, which results from the breach of the insured’s intellectual property. It also reimburses the insured for loss, including loss mitigation expenses and legal expenses, which results from an unintentional breach of a third party’s intellectual property. Such expenses include the legal expenses from a false accusation or frivolous lawsuit regarding an alleged breach.
In this definition, a breach is any violation of the security of intellectual property which results in an unauthorized access to and/or use of the property. The insured’s intellectual property includes any copyright, patent, trademark or service mark belonging to the insured. Also included are any trade secrets or processes including designs, customer lists and proprietary information that either actively or inactively contributes to the value of the insured’s business or product.
A third party’s intellectual property is construed to mean any copyright, patent, trademark, service mark, trade secret or process including designs, customer lists and proprietary information belonging to a third party, which actively or inactively contributes to that party’s business or product.
Legal expenses include amounts paid for attorney’s fees, expert witness costs, court costs, settlement costs and public relations expenses, as well as monetary fines and penalties assessed directly to the insured. This is true whether or not the matter involves criminal allegations.
Loss mitigation expenses refer to any expenses the insured incurs to reduce further loss. Loss of income includes the loss of business income that would have been earned or incurred in absence of an incident. Loss refers to any amount paid as damages by the insured, including tort liability imposed.
Defending intellectual property.
Intellectual property is protected by robust and strict laws. When such rights are violated, it is advisable to hire an intellectual property lawyer. An experienced attorney can help you sue for damages including lost royalties. If your case is successful, the party who violated your rights may be required to pay for your legal fees as well as compensate you for using your work without permission. In the event of a breach, the first step is sending a “cease and desist” letter. This serves as a clear warning to the infringer to immediately stop, and that you intend to claim compensation from them. However, it is important to refrain from ever making an unjustified threat of intellectual property infringement. To do so could incur the threat of a lawsuit. Always seek professional advice if you are unsure what to do.
Next, calculate the compensation you believe you are owed. You are entitled to claim compensation for lost sales or for an amount of an infringer’s increased profits. While the choice is yours, it is usually easier to prove an infringer’s gain than your own loss.
To calculate such compensation, you are within your rights to ask the infringer how many products they have sold and at what price. They would be required to disclose this information during a legal action, so there’s no reason for them to withhold it. With such information and with strong protection in place, a settlement can often be reached without the need for legal action.
Your best defense is your own vigilance. If you have a strong intellectual property portfolio, even if your rights have not been infringed, they can be diluted or even lost if you do not remain vigilant about what is happening in your own industry. Patents, registered designs and trademarks can also be lost if someone registers intellectual property that is too close to yours and you do not object.
This is why, in addition to being on the lookout for infringements, it is always in your best interest to keep an eye on what applications are being made to register new intellectual property. This can be a time-consuming activity, yet one essential to maintaining and protecting the value of your intellectual assets.
If you cannot do this yourself, seriously consider engaging someone reputable to do it for you. Captive insurance is a strategy that provides intellectual property coverage while paying the premiums to your own insurance company.
Your intellectual property is your business property. Evaluate its importance to the life of your business and assess whether or not intellectual property coverage is right for you.