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Intellectual Property 101: Safeguarding Your Business Innovations With Capsule Insurance

You’ve worked hard to build your business up to where it is today – investing valuable time, creativity, and resources into developing unique ideas and products. So protecting those ideas with Intellectual Property (IP) insurance is paramount.

A robust IP strategy helps you stay ahead in a competitive market. To learn more, we teamed up with our partner, specialist insurance provider CFC, to share insights around why you should be investing in an IP policy for your business.

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What is intellectual property?

Intellectual Property insurance shields you from potential issues related to your creative property. The most common forms of IP include:

  1. Patents: Patents protect fresh, new ideas. To secure a patent, your creation must be original. Once secured, you’ll have the exclusive right to stop others from making, using, or selling your invention.

  2. Copyright: Copyright safeguards artistic works such as paintings, music, architecture, and software code. It begins automatically when the work is created, providing the exclusive rights for using and distributing the original creation. However, under ‘fair use’, anyone can use copyrighted works in certain circumstances (for example, non-commercial contexts or for parody/pastiche).

  3. Design rights: Design rights protect how an object looks, its visual appeal, and artistic qualities. This is different from a patent, which concerns the functionality of an object. For example, Pringles and Toblerone have protected the shapes of their products.

  4. Trade secrets: Trade secrets refer to confidential information that gives a company a competitive edge. This may include sales techniques, supplier lists, undisclosed ingredients, and manufacturing methods – think KFC’s secret blend of 11 herbs and spices.

  5. Trademark: A trademark is a recognisable word, name, or symbol that distinguishes products or services. While registration isn’t mandatory, there’s usually stronger protection for trademarks that are registered.

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Do I need Intellectual Property insurance?

Intellectual Property insurance is essential for all businesses, but especially those scaling rapidly. Whether you’re facing potential claims of infringement from other companies or tackling direct threats to your own intellectual property, this coverage ensures your innovations are not only legally protected, but also financially secure.

How does my Intellectual Property insurance policy work?

Intellectual Property insurance covers a variety of IP risks, including:

  1. Defence: Provides coverage against third-party infringement allegations, covering legal defence costs, out-of-court settlements, and court-awarded damages. It also includes claims of entitlement made by employees, along with specific contract breach elements related to IP – as well as automatic coverage for directors and officers in cases involving both the company and the director.

  2. Contractual indemnity: Focuses on exposure resulting from contractual obligations, especially with customers or licensees. It covers claims made directly or further down the supply chain.

  3. IP validity cover: A critical coverage which helps a business afford to defend their IP rights when others attempt to invalidate them.

  4. IP ownership cover – Covers costs of a dispute relating to the ownership of the IP.

  5. Pursuit of infringers: Covers the enforcement of owned or licensed intellectual property, including legal costs for negotiating or taking court action against alleged infringers and defending counterclaims. It also extends to coverage where a claimant alleges the insured party is infringing on their rights.

  6. Loss of IP rights: Handles costs incurred in registering and maintaining the insured party’s IP rights if they’re invalidated due to a covered infringement claim.

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Debunking common myths around IP insurance

“IP risks are a non-issue for my business – they’re more of a headache for big corporations.”

Growing businesses are, in fact, the most common target for patent trolls – with larger companies leveraging their status to deter competition. With intangible assets like IP making up around 70% of a typical company’s balance sheet, protecting your business from the financial losses and liabilities associated with IP risks can be crucial.

“Without a patent in place, there’s no possibility of infringement on my part.”

An infringement claim is about using someone else’s property – not your own. It’s important to note that having your own IP rights (like patents, copyrights, or trademarks) doesn't guarantee you won’t infringe on others’ – while not having these rights doesn’t mean you can’t infringe either.

“I created this whole concept from scratch, so I can’t be infringing on anyone’s IP.”

Though your business is undoubtedly unique, many modern innovations represent progress rather than entirely new concepts. Developing something internally doesn’t guarantee immunity from infringing on another party’s intellectual property rights.

“My business isn’t in the tech sector – should Intellectual Property insurance be on my radar?”

Intellectual Property insurance is important in almost every industry. If something is valuable to your business, then it’s likely valuable to your competition as well – and it should be protected as a result. Plus, even businesses that don’t strictly identify as tech companies may be exposed to technology-related risks.

Secure your innovations with Capsule

In the high-growth business landscape, there are challenges around every corner. Protecting your intellectual property is not just a legal necessity – it’s a vital step along the path to success.

To discuss how we can guarantee your groundbreaking ideas remain exactly that – yoursspeak to a member of our team today.

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If you’re interested in how we can help or just want to introduce yourself, get in touch. We’re always happy to talk. Alternatively you can book a meeting with one of the team using the Capsule Calendar.

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Capsule Insurance Services Limited t/a Capsule are an Appointed Representative of James Hallam Limited who are authorised and regulated by the Financial Conduct Authority (FCA), under Firm Reference Number (FRN) 134435. Capsule's FRN is 948838. Registered in England and Wales company number: 13340821. Registered office is 48 Belle Vue Terrace, Malvern, England WR14 4QG.

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