Why you should buy Intellectual Property insurance

Have a break, have a KitKat… just buy IP insurance first!

The folk at Nestlé have been in a long-running battle to keep the competition from getting their grubby fingers on, well, their four fingers. It seems that the iconic KitKat and its four-finger design is not something that can be protected in the U.K. despite what Nestlé and their legion of litigators might think.

Protecting Intellectual Property (IP) – how hard can it be?

It can be a tricky business looking after your IP. Interestingly, the KitKat design is protected in Germany, France, Australia, South Africa and Canada – just not in the UK. Ironically, the firm that Nestlé has been fighting owns Toblerone and its pyramid shape has been successfully protected. However, a recent change in the design may leave Toblerone itself vulnerable. This IP business can get really tricky.

Even a massive product you might think as safe, the iPad, has suffered. Back in 2012, Apple was forced to pay $60 million to settle a long-running dispute in China. Apple believed that they had bought ownership of the trademark from a firm called Proview. This was partly true, but not in China – which happened to be Apple’s second largest market. It could have been worse – Proview wanted an eye-watering $1.57 billion, they owned the name, while Apple had created the value.

What can you do?

As the Nestlé and Apple examples show, even brands with huge resources can become embroiled in disputes. These can be both expensive and lead to business interruption because of the complexity of global markets. At the same time the cost of mounting a legal challenge or defending one and the often unknown consequential loss from IP actions can be prohibitive and could seriously affect the survival of most SME businesses.

In both cases an appropriate insurance, that may cover both infringement liability and/or infringement assertion actions, provided by professional advisors is a very effective solution to mitigate the Intellectual Property risk related to any business. It is not just the cost of litigation, it could be the cost of a contract. One example we have worked on involved a European manufacturer who simply could not get a contract approved with a firm in the United States without IP insurance.

The deal was of a size where the prospect of an alternative supplier taking action and bringing the supply chain to a halt at the doors of the courthouse was a risk not worth entertaining. Fortunately, with our help and using specialist markets, we created a policy which covered that specific contract. The risks’ assessment, based on a simple questionnaire and copy of the contract, also involved a free advisory check of all the IP exposures that might threaten its business continuity. The client was then free to boil the kettle, have a break and have a KitKat.

If you would like to find out more about how Shepherd Compello can help you with Intellectual Property insurance please contact our Senior Broker Fabio Di Virgilio: Fabio.Virgilio@shepherdcompello.com

Follow Fabio Di Virgilio on LinkedIn.

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