Who should obtain patent insurance?

15 April 2006

Every company that manufactures or markets new products must cover its risk by obtaining patent insurance. The key word here is 'new'; if new technology, new design or new functionalities are available or embedded in a product manufactured or marketed by a company, it is recommended that the company obtain patent insurance.

Besides, several aspects of businesses have inherent intellectual property material that may not even be known. A business may have websites that need to be protected. They are technical publications and, as a publisher, the company may be liable to copyright infringement claims or may need to sue a rival that has lifted data off its website.

If the company patents its new technology, it will benefit from patent pursuance insurance or enforcement insurance. If the company does not hold the patents, it is possible that some other company holds the patents to its products and, therefore, it should get patent litigation insurance, to mitigate the risk of possible infringement suits.

Patent insurance of both kinds (defensive and offensive) should be obtained by companies of all sizes — small, medium, and large — because patents are size-neutral, and so is insurance. In fact, smaller companies must try to get more patents and more enforcement insurance, to benefit from licensing to bigger companies. Bigger companies, on the other hand, must obtain liability insurance to protect against lawsuits brought against them by smaller companies.

Of course, bigger companies must also work to develop to their own patents, and get enforcement insurance on them. In short, if you have your own patents, you must have patent enforcement insurance. If you don't have patents in your product line, you must have patent liability insurance.